The Direct and Indirect Effects of Transit Infrastructure within Cities

Cities are one of the major engines of economic growth. By 2050, it is estimated that more than 2 billion workers will live in cities, and most of this rapid urbanization will occur in low- and middle-income (LMIC) countries. While urbanization can provide broad economic opportunities, it also brings significant challenges for policy makers, especially in LMICs where cities grapple daily with difficult decisions on allocating scarce resources. Without a complete picture of both the direct and indirect benefits that various urban policies can have—in particular in the transportation sector—governments may underinvest or poorly target their limited resources.  

In this Policy Research Talk, World Bank economist Román Zárate will discuss recent models developed in the urban research literature, how they have been applied to cities within LMICs, and what they reveal about not only the direct but also the indirect effects of transportation investments. Investments in transportation benefit citizens not only through the obvious channel of reducing commute times, but also through broader-scale transformations of the structure of the economy. New research shows the substantial benefits that can accrue through mechanisms like increasing workers’ bargaining power and shifting labor from the informal to the formal sector. Zárate will conclude by presenting an open-source toolkit developed in collaboration with IGC available to researchers and policy makers to simulate the impact of urban policies.