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A time series methodology is developed that differentiates the effects of highways on development from the effects of development on highways. This methodology uses pooled time-series and cross-sectional data on highway expenditures and county employment for the 87 Minnesota counties and all 9 economic sectors over the 25-year period 1957-1982 and includes classification of counties based on access, demographic and socioeconomic features. Results from vector autoregressions are tested against modern causality tests of Granger-Sims type. In the wholesale and natural-resource-based service sectors (e.g., tourism), increased highway expenditures result in long-term employment increases. While regionally very substantial, the impacts are distributional, i.e., the statewide impact is negligible. Government role is mostly reactive, increasing funding to counties whose economy is increasing, except in rural areas where government also attempts to stimulate declining economies. Funding decisions are highly sensitive to changes in the economy, especially in rural areas, and (as our evaluation of the Minnesota Department of Transportation [Mn/DOT] project selection process indicates) are primarily influenced by the District recommendation. Further, a new B/C project selection process is developed and tested on highway weight restriction policies in Northeast Minnesota. Both simulation with large 1/0 model and comparison with actual funding decisions made independently by Mn/DOT indicate agreement with our results. An extensive literature review and 175 references are included. This report consists of nine separate publications: an executive summary, the final report and seven appendices.

This is Appendix II of Report 89-11, "Transportation and Economic Development."

This is Appendix III to Report 89-11, "Transportation and Economic Development."

This is Appendix IV to Report 89-11, "Transportation and Economic Development."

This is Appendix V for Report 89-11, "Transportation and Economic Development."

This is Appendix VI for Report 89-11, "Transportation and Economic Development."

This is Appendix VII of Report 89-11, "Transportation and Economic Development."