High-speed rail and economic development: business agglomerations and policy implications

High-speed rail (HSR) investments in the United States have been justified in part as an economic stimulus, helping to increase firm productivity, resulting in new jobs and businesses as well as higher wages and income. Subscribing to this view, in 2009 the Obama Administration pledged US$8 billion to thirteen HSR projects across thirty-one states under the American Recovery and Reinvestment Act (ARRA) as part of the response to the deep recession of 2008. The federal HSR stimulus money was subsequently rejected by the newly elected governors of Wisconsin, Ohio and Florida, fearing that the proposed HSR projects would be too costly to taxpayers and that the project risks would outweigh the economic benefits. As a result, federal funds to construct HSR lines have been redirected to key corridors in other states where the economic benefits of intercity railway investments are thought to be high and projects are ready for implementation (Figure 15.1).