How will/can the HS2 lead to economic growth?Watch
Think about infastructure. How would improving (capital as) a factor of production effect the economy? What will happen to the productive potential of the country? Be creative.
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However, in the real world there are so many things that effect Real GDP growth. So you'll be unable to gain a real figure of whether or not HS2 will directly help increase economic growth, as you'd be discarding all the other factors. Besides.. I doubt it'd make any significant difference, it would just help people get around.
Once it is finished, the fact you have improved the service is economic growth in itself. After all, economic growth is defined as an increase in the value of goods and services produced by the economy. The utility of individuals will increase because they prefer lower journey times. HP2 will not provide the service as a one off but will continue to do it for years meaning people are better off for years.
May be I have just stated the obvious so far. I think a more interesting way to think about it is giving people an increase time. Private users will use a lot of the extra time for leisure but they will use some of it to work more. Business users will have less time taken out of their day travelling so they will have more time for productive activities. Both these will increase output supply in other industries.
None of this sounds that important compared to the overall size of the economy and it isn't really but nothing is. Long term growth requires increases in the productive capacity of the economy which is made up of a lot of small parts. If there was an easy solution, all the world's problems would be solved but since there isn't we have to start somewhere and HP2 is a big project even if it has a small impact.
HP2 won't provide continued growth for years, the benefit won't increase over time, it will come as a jump then remain constant but no project will. To continue to achieve growth we need to continue to complete projects.
In conclusion, how the heck doesnt HS2 create growth?? Well thats what you put in your big evaluation point ( think time lags, size of 'x'er depends on.....lower Labour costs wouldnt be achieved if)