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Investment in Rail and Road Infrastructure


  • Wilfried Puwein



Starting in the 1980s, Austria has intensified its investment in the rail system while at the same reducing investment in its infrastructure of roads. The purpose of this policy is to improve rail's competitive position and encourage a shift from road to rail as the more "environmentally friendly" alternative, such as is envisaged by the Austrian transport policy. Today, the Federal government and quasi-governmental road construction companies invest only half the amounts, in nominal terms, in federal roads of what they spent in the early 1980s. Ever since 1988, investment into the rail infrastructure has been higher than that made in the network of federal roads. The same shift in investment focus can, incidentally, be observed in Germany and Switzerland. Yet the effort has so far had little effect on the transport performance, respectively, achieved by rail and road. The railway continued to lose market shares, and the slightly weaker growth of road traffic, combined with stagnating road construction, boosted the incidence of traffic jams. The development of the network of major roads helped motor vehicles gain an ascendancy over the railways in long-distance transport, fuelling in particular the brisk growth of truck transit traffic. High-capacity roads for urban short-distance traffic similarly favoured the use of cars. Railway construction and improvement projects pursued over the past ten years, on the other hand, are still largely incomplete and thus have so far had little impact on the railway's offer of services. Improving the rail infrastructure is a necessary but by itself inadequate prerequisite for shifting traffic from road to rail. In addition to renewing its technical infrastructure, the railway needs to overhaul its range of services at an organisational level. The European Union hopes that the opening of networks will spawn competition between railway operators which in turn will lead to more efficient services. In line with EU transport policy objectives, road traffic is to bear its own marginal costs (including the costs to the environment and the costs of accidents and congestion) and will thus be made more expensive.

Suggested Citation

  • Wilfried Puwein, 1999. "Investment in Rail and Road Infrastructure," WIFO Monatsberichte (monthly reports), WIFO, vol. 72(8), pages 577-587, August.
  • Handle: RePEc:wfo:monber:y:1999:i:8:p:577-587

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    References listed on IDEAS

    1. de Mello, Luiz R, Jr, 1999. "Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 133-151, January.
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    6. Chris Allen & Michael Gasiorek & Alasdair Smith, 1998. "The competition effects of the Single Market in Europe," Economic Policy, CEPR;CES;MSH, vol. 13(27), pages 439-486, October.
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