1. Introduction

1. Introduction

Transportation investment is defined as additions to transportation fixed assets. Transportation fixed assets refers to structures, motor vehicles, and other machinery and equipment, which are used in the provision of transportation services for more than one year. Due to data limitations, we exclude other machinery and equipment that are used in transportation by non-transportation-entities. Our definition thus reflects a combination of asset type and business characteristics of investors. Therefore, our list of transportation fixed assets includes all fixed assets within transportation industries and fixed assets that are transportation-specific and acquired by entities outside transportation industries. A fixed asset is transportation-specific when its only use is in transportation. For example, a pickup truck is transportation-specific whether or not it is used by a transportation entity, while a computer is not transportation-specific even if it is used by a trucking company. Therefore, our list includes all pickup trucks but only the computers used by transportation industries. Our extended definition of transportation assets and the related investment measures better serve transportation analysis purposes than measures of investment on a pure asset basis or industry basis.

Many public policy questions focus on infrastructure, and there is interest in the levels and patterns of investment in infrastructure. The data in this paper address infrastructure, but they also cover the transportation equipment (aircraft, railroad cars, trucks) that use the infrastructure. Many issues relating to the impact of transportation investment on the economy, such as impact on aggregate demand and employment, relate just as much to equipment as to infrastructure. Infrastructure investment can leverage equipment investment, by improving equipment turn times, and can impact directly on equipment maintenance costs. On the other hand inadequate equipment investment can constrain the transportation system even if infrastructure is adequate. By providing total investment data, but breaking out infrastructure investment, we provide data that can be used to address these issues. In this way we also provide data that is comparable to investment data in national account statistics and in the Government Transportation Financial Statistics reports.

Transportation investment or additions to transportation fixed assets can take two forms, purchase of new assets and change in inventories. Both purchases of new fixed assets and change in inventories are incorporated in our transportation investment estimates. Purchases are conducted by government, business, and households. Change in inventories consists of the current production of goods for transportation use that are not used or sold. Examples of change in inventories include motor vehicle inventories in the hands of manufacturers and dealers, work in progress on construction of transportation infrastructure, etc. Here is another innovation of our approach to measuring transportation investment, i.e., counting household purchase of transportation assets as investment. The national accounts classify household purchase of motor vehicles under current consumption to satisfy current national accounting principles, but household transportation activities are an integral component of overall transportation operations and should be so treated for transportation analysis purposes. Such treatment on the operations side requires similar treatment on the investment side.

The total value of investment, calculated before deducting depreciation or the portion of investment that is used to replace depreciation of the existing transportation capital stock, is referred to as gross investment. Deducting the depreciation from gross investment provides net investment, which represents the net addition to the stock of transportation capital for the period. Whether the transportation capital stock increases or decreases over a given period of time depends upon whether gross investment is greater or less than depreciation. Although the net investment is often more informative than gross investment, calculating it requires extensive measurement work in capital stock accounting.

Transportation investment relates to the economy on both the demand and supply sides. Data on transportation investment have many different uses in dissecting the inter-relationship between transportation and the economy. First, as additions to the stock of transportation capital, transportation investment helps augment the capacity and efficiency of transportation by implementing new technology, establishing continuity of routes, eliminating bottlenecks, improving the coverage and accessibility of the transportation network. Thus, the level of transportation investment indicates the potential capacity and efficiency of transportation, and its contribution to the overall economy for years to come.

Second, as a component of aggregate demand, transportation investment shows the amount of economic resources devoted to transportation capital. A time series of transportation investment and its percentage share in GDP provide an overview of changes in the resource allocation, and the relationship between transportation and GDP over time.

Third, data on transportation investment can be used to support policy analysis on the dynamics of transportation infrastructure, transportation technology, and the industrial structure in relation to the overall economy. Moreover, the relationship between public and private investment in transportation has been an ongoing research interest of academics. For example, the data can support research studies that attempt to investigate whether an increase in public investment displaces private investment or encourages private investors to invest more.

Fourth, transportation investment as a final demand (use) is affected not only by the total output but also by structural changes in the economy. For example, during a given period, a steady increase in transportation investment as a percentage of GDP could be accompanied by an increase or a decrease in overall capital investment as a percentage of GDP. Change in transportation investment in relation to overall capital investment might indicate a change in the future structure of the economy.

Fifth, there are two major types of fixed capital, namely, infrastructure and rolling stock, for transportation. While the private sector is the major investor in rolling stock, government is the major investor in infrastructure. This may, however, differ among transportation modes. or example, whereas highway infrastructure is almost entirely funded by the government, railroad and pipelines are mostly investments of the private sector. Therefore, data on transportation investment by sector of investors, types of assets, and transportation mode provide a clearer picture of transportation investment patterns for each of the transportation modes.

Finally, transportation investment by mode of transportation can indicate possible structural changes within the transportation industry, which is important for transportation policy making. For example, a significant switch in capital investment between different modes (e.g., from air transportation to public transit) or unmatched growth for different types of assets within a single mode (e.g., a rising annual growth rate in the number of motor vehicles on the road compared with a much lower growth rate in highway investment) may signal a need to adjust future transportation investment plans.

It is apparent from the above discussion that statistics on transportation investment are of great value for transportation planning and budgeting purposes, policy makers interested in understanding the impacts of transportation investment, and for researchers interested in investigating the link between transportation investment and economic development. In order to serve these and other related purposes, the data compilation effort should go beyond producing aggregate statistics on transportation investment. The effort should produce comprehensive statistics, incorporating public and private investment, and also it should be as detailed as possible.