Commentary: Economists long argued that infrastructure is critical to economic development. A new study of Roman road networks makes this point in a new way. It finds that proximity to ancient roads correspond to increased economic development today.
The Roman Empire, of course, was a political entity that encompassed much of southern Europe, northern Africa, and the Middle East. The traces of Roman roads are found everywhere within this region. Indeed, it can be argued that to be part of the Roman empire was to be connected by road to the City of Rome.
Economic development and Roman roads were inextricably connected. The extension of roads to Britain illustrates this point. When the Roman’s conquered what is today modern England, there were no roads and no cities; travel was along tracks that often were in poor condition. Where Roman roads went, population followed. London, once connected to the Roman road network, quickly grew from a small village to the largest city in England, for example.
Rome roads were good roads, often very straight, made in layers using varied materials with a paved surface and good drainage. Just as in New Mexico, where much of the modern route of I-25 follows the old Spanish Camino Real, in many places in the former Roman Empire, Roman routes continue in use to the present.
Thus, Roman roads predict economic development not only in ancient times but also in the present. The new study by a group of Dutch economists lead by Carl Johan Dalgaard of the University of Copenhagen shows this by looking at both population densities and also at light production used as proxies for economic activity. And sure enough, the presence of ancient roads predicts modern economic activity.
Now you might say, but wait! How do we know that presence of natural features that promote economic activity isn’t precisely why the Romans built the roads where they did, and not vice versa? That is, that geography not roads are the reason for the long persistence in growth associated with roads. London after all was serviced by an extensive ancient road network, but it is also one of the great natural ports of Western Europe.
The Danish researchers control for this reverse causality by looking at a natural experiment. Beginning about 500 CE, thanks to the development of a new saddle, The Middle East and North Africa, the so-called MENA region, shifted from wheeled vehicles to using camels for transport. The use of roads dramatically declined. Trade routes no longer followed the old Roman roads. Consequently, if it was the Roman roads that drove development, you would not expect modern economic development in MENA to depend on Roman roads, and that is what was found. Economic development in MENA is not statistically linked to Roman roads.
All this has implications for New Mexico. Roads are public good that benefits everyone who uses them. They are agnostic as to the type of economic development as they can benefit. Businesses, responding to market forces, are free choose that activity that is most profitable. In this sense, roads support free markets and economic efficiency. Moreover, these benefits persist over extended periods of time.
On the other hand, New Mexico has chosen to use tax credits to promote economic development. Unlike roads, these are transitory in nature. The benefits accrue not to business in general, but to that small subset of a chosen few. This is inherently anti-capitalist and anti-free market in that government, in the way it structures the tax credits, is picking winners and losers; and we know how well that works.
Christopher A. Erickson, Ph.D., is a professor of economics at NMSU. He teaches in NMSU’s Doctor of Economic Development Program. The opinions expressed may not be shared by the regents and administration of NMSU. Chris can be reached at chrerick@nmsu.edu.