Ich geb’ gas, ich geb’ gas*

One of the best things about Germany is the Autobahn. After all, Germans understand that the purpose of a road is to get you from A to B as fast and efficient as possible. Did I mention that Germans love efficiency? So, in case you are in your office right now and have a meeting in one hour in a city 120 miles away, I can assure you, you can make it on time. At least in Germany, you can. I know, because I did it.

Good roads with few traffic jams and potholes not only allow you to get to your meeting in time, but they are the foundation of much economic activity. Think of all the goods that need to be transported from suppliers to factories, from factories to warehouses and shops, and finally to customers. And while I would love to see more of this transport move to cleaner and more efficient modes of transportation like trains, the truth is that the majority of it still happens on roads.

Having good road infrastructure thus becomes a foundation of economic prosperity and economic growth. Unfortunately, it is surprisingly hard to measure the quality of infrastructure in a country. The WEF does a survey that relies on official government statistics like spending on infrastructure etc. but these government statistics are i) often delayed and not representative of the status quo, and ii) tainted by local ‘frictions’ (if we can call them that). Did you know that in the EU, it costs €9.75m to build 1km of road? In Albania, it can cost up to €65m to build the same 1km of road. And in case you are wondering, Albanian construction workers, are not better paid than workers in the EU.

So, Mariano Moszoro and Mauricia Soto came up with a simple and very intelligent idea. They used the data from Google maps to measure how fast cars moved on average between the major cities in different countries. The average speed depends of course on local speed limits but also on the density of the road network, the number of cars on the road, and the quality of the roads. Adjusting for local topography and speed limits provided them with an adjusted mean speed score for a broad range of developed and developing countries. This adjusted mean speed is effectively a measure of the quality of the road infrastructure in different countries. And it correlates highly with GDP per capita. Emerging markets tend to have lower mean speeds. For instance, Bangladesh has an adjusted mean speed score of 48, Colombia of 72, and Lebanon of 67.  In contrast, the United States, France, and Italy all have an adjusted mean speed of 114 while Germany is not far behind at 1107. But then there is a gap in countries like the UK, Japan, and China. These countries may have good quality roads on average, but the road density is insufficient given the number of cars on the road. And that is holding up traffic and destroying economic output. Improving the road network or reducing the number of cars on the road to catch up with the likes of the United States or France can literally boost these economies by some 10%. Infrastructure spending may be a form of big government, but it is big government at its very best.

Adjusted mean speed of different countries

Source: Moszoro and Soto (2022)

*I assume very few people got the reference in the title even if they do speak German. For those of you who speak German and are too young to remember the Neue Deutsche Welle, here is a bit of education for you: