The Effect of Rail Infrastructure Development on Economic Growth
1. MATH 1332 Minor Thesis
The effect of Rail infrastructure development on
economic growth in Regional Victoria
Milan Jovetic
2. MATH 1332 Minor Thesis
Project aim:
• The aim of this project is to asses the impact of rail infrastructure
investment on the regional economy of Victoria and evaluate
economic convergence between Metropolitan and Regional
areas in Victoria.
2
5. MATH 1332 Minor Thesis
ACCESSIBILITY:
• Better accessibility reduces the transport cost and presents local
companies and individuals with an opportunity to present their products
in much larger markets.
• Accessibility indicators:
• No. of train services
• Travel time
• Patronage
5
9. MATH 1332 Minor Thesis
No. of train services and Travel time to Melbourne :
No of train trips per resident vs Year
Variable
20.0
Barwon
Central Highlands
Loddon
No. of train trips per resident
17.5 Goulburn
Gippsland
15.0
12.5
10.0
7.5
5.0
2006 2007 2008 2009 2010
Year
Coef R-Sq
Central Highlands (Ballarat corridor) 1.58 91.90%
Loddon (Bendigo corridor) 1.24 84.80%
Gippsland (Traralgon corridor) 1.09 80.20%
Barwon (Geelong corridor) 0.786 89.20%
Goulburn (Seymour corridor) 0.096 43.70%
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10. MATH 1332 Minor Thesis
Economic growth indicators
Economic situation in Victorian regions is assessed by utilizing following
variables:
• No. of income earners
• Average wage and salary income
• Average value of private sector house
• No. of building approvals
• Unemployment
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11. MATH 1332 Minor Thesis
No. of wage and salary earners
% of wage and salary earners within working age population living in
combined districts
70.0
69.0
68.0
67.0
Melbourne
66.0
%
65.0
Train Lines
64.0
63.0
62.0 No Train lines
61.0
60.0
2006 2007 2008 2009
Melbourne Train Lines No Train lines
11
13. MATH 1332 Minor Thesis
No. of wage and salary earners (Convergence)
Convergance of No. of wage and salary earners (2006 - 2009)
1
Melbourne
Av growth rate (2006 - 2009) (%)
Barwon (Geelong)
Gippsland (Traralgon)
0
Central Highlands (Ballarat)
Loddon (Bendigo)
-1
East Gippsland
Western Dist.
Goulburn (Sey mour)
-2
Wimmera
-3 Mallee
Ov ens-Murray
38 39 40 41 42 43 44 45
No. of Wage and salary earners in 2006 (%)
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14. MATH 1332 Minor Thesis
Average wage and salary income
Average wage and salary income (across entire population living in
the district)
50,000
Melbourne
48,000
46,000
44,000
42,000 Train Lines
$ 40,000
38,000 No Train lines
36,000
34,000
32,000
30,000
2006 2007 2008 2009
Melbourne Train Lines No Train lines
General Linear Model:
Average Wage and salary income versus Area, Year
Factor Type Levels Values
Area fixed 3 1, 2, 3
Year fixed 4 1, 2, 3, 4
Analysis of Variance for Average Wage and salary income,using Adjusted SS for Tests
Source DF Seq SS Adj SS Adj MS F P
Area 2 402579992 402579992 201289996 63.34 0.000
Year 3 138857589 87656582 29218861 9.19 0.000
Area*Year 6 483207 483207 80535 0.03 1.000
Error 32 101692982 101692982 3177906
Total 43 643613771 14
15. MATH 1332 Minor Thesis
Average wage and salary income
One-way ANOVA: Average Wage and salary income versus Area
Source DF SS MS F P
Area 2 402579992 201289996 34.24 0.000
Error 41 241033779 5878873
Total 43 643613771
S = 2425 R-Sq = 62.55% R-Sq(adj) = 60.72%
Individual 95% CIs For Mean Based on
Pooled StDev
Level N Mean StDev ---------+---------+---------+---------+
1 4 44333 2355 (-----*-----)
2 20 36951 2421 (-*--)
3 20 33681 2439 (--*--)
---------+---------+---------+---------+
36000 40000 44000 48000
Pooled StDev = 2425
Tukey 95% Simultaneous Confidence Intervals
All Pairwise Comparisons among Levels of Area
Individual confidence level = 98.06%
Area = 1(Melbourne) subtracted from:
Area Lower Center Upper
--------+---------+---------+---------+-
2 -10612 -7382 -4151 (-----*------)
3 -13882 -10652 -7421
(------*-----)
--------+---------+---------+---------+-
-10000 -5000 0 5000
Area = 2(Trains) subtracted from:
Area Lower Center Upper --------+---------+---------+---------+-
3 -5135 -3270 -1405 (--*---)
--------+---------+---------+---------+-
-10000 -5000 0 5000
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16. MATH 1332 Minor Thesis
Average wage and salary income (Convergence)
Convergance of Average wage and salary income (2006 - 2009)
17
East Gippsland
Av growth rate (2006 - 2009) (%)
16
Gippsland (Traralgon corridor)
15
Wimmera
Loddon (Bendigo corridor)
Mallee
14
Central Highlands (Ballarat corridor)
Ov ens-Murray Melbourne
Barwon (Geelong corridor))
13 Western Dist.
Goulburn (Sey mour corridor)
30000 32000 34000 36000 38000 40000 42000
Av. Wage and salary income in 2006 ($)
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17. MATH 1332 Minor Thesis
Average value of private sector house
Average value of private sector house
250
Melbourne
240
230
No Train lines
$ ('000) 220
Train Lines
210
200
190
2006 2007 2008 2009 2010
Melbourne Train Lines No Train lines
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18. MATH 1332 Minor Thesis
Average value of private sector house
One-way ANOVA: Average value of private sector versus Area
Source DF SS MS F P
Area 2 2325 1162 4.07 0.023
Error 52 14858 286
Total 54 17183
S = 16.90 R-Sq = 13.53% R-Sq(adj) = 10.20%
Individual 95% CIs For Mean Based on
Pooled StDev
Level N Mean StDev ---------+---------+---------+---------+
1 5 235.94 13.00 (------------*-----------)
2 25 212.32 16.77 (-----*-----)
3 25 216.02 17.60 (-----*-----)
---------+---------+---------+---------+
216 228 240 252
Pooled StDev = 16.90
Tukey 95% Simultaneous Confidence Intervals
All Pairwise Comparisons among Levels of Area
Individual confidence level = 98.05%
Area = 1(Melbourne) subtracted from:
Area Lower Center Upper ---------+---------+---------+---------+
2 -43.58 -23.62 -3.65 (------------*-------------)
3 -39.89 -19.92 0.05 (-------------*------------)
---------+---------+---------+---------+
-30 -15 0 15
Area = 2(Trains) subtracted from:
Area Lower Center Upper ---------+---------+---------+---------+
3 -7.83 3.70 15.22 (------*-------)
---------+---------+---------+---------+
-30 -15 0 15 18
19. MATH 1332 Minor Thesis
Average value of private sector house (Convergence)
Convergance of private house value across statistical districts
16
Gippsland (Traralgon corridor)
Average growth rate 2006-2010 (%)
14
Melbourne
East Gippsland Mallee
12 Western Dist.
Goulburn (Sey mour corridor)
Barwon (Geelong corridor)
10 Loddon (Bendigo corridor)
8 Wimmera
C entral Highlands (Ballarat corridor)
6
4
Ov ens-Murray
2
180 190 200 210 220
Average value of private sector house in 2006 ($ '000)
Regression Analysis: Average growth rate (2006- 2010) versus Average value of private house in 2006
The regression equation is
Average growth rate 2006-2010 = 25.5 - 0.0740 Average value of private sector
Predictor Coef SE Coef T P
Constant 25.53 17.36 1.47 0.175
Average value of private sector -0.07403 0.08631 -0.86 0.413
S = 3.67413 R-Sq = 7.6% R-Sq(adj) = 0.0%
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20. MATH 1332 Minor Thesis
No. of building approvals
Building appovals - Total dwelling units per thousand people
12.0
Train Lines
11.0
10.0
Melbourne
9.0
No.
8.0
No Train lines
7.0
6.0
5.0
2006 2007 2008 2009 2010
Melbourne Train Lines No Train lines
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21. MATH 1332 Minor Thesis
No. of building approvals
One-way ANOVA: No of building approvals versus Area
Source DF SS MS F P
Area 2 84.81 42.40 13.55 0.000
Error 52 162.78 3.13
Total 54 247.58
S = 1.769 R-Sq = 34.25% R-Sq(adj) = 31.72%
Individual 95% CIs For Mean Based on
Pooled StDev
Level N Mean StDev -----+---------+---------+---------+----
1 5 8.125 1.422 (-------------*------------)
2 25 8.715 1.800 (-----*-----)
3 25 6.144 1.790 (-----*-----)
-----+---------+---------+---------+----
6.0 7.2 8.4 9.6
Pooled StDev = 1.769
Tukey 95% Simultaneous Confidence Intervals
All Pairwise Comparisons among Levels of Area
Individual confidence level = 98.05%
Area = 1(Melbourne) subtracted from:
Area Lower Center Upper +---------+---------+---------+---------
2 -1.501 0.589 2.679 (----------*---------)
3 -4.071 -1.981 0.109 (---------*----------)
+---------+---------+---------+---------
-4.0 -2.0 0.0 2.0
Area = 2(Trains) subtracted from:
Area Lower Center Upper +---------+---------+---------+---------
3 -3.777 -2.571 -1.364 (-----*-----)
+---------+---------+---------+---------
-4.0 -2.0 0.0 2.0
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22. MATH 1332 Minor Thesis
No. of building approvals (Convergence)
Convergance of building approvals for all dwelling units (2006 - 2010)
60
Average growth rate (2006 - 2010) (%)
Melbourne
50 Ovens-Murray Central Highlands (Ballarat corridor)
40
30 Gippsland (Traralgon corridor)
Loddon (Bendigo corridor)
Goulburn (Seymour corridor)
20 Barwon (Geelong corridor)
10
Western Dist. East Gippsland
0 Mallee
Wimmera
-10
4 5 6 7 8 9 10 11
No of building approvals in 2006 / 1000 residents
Regression Analysis: Av growth rate (2006-2010) versus No of building approvals in 2006/1000 residents
The regression equation is:
Av growth rate (2006 - 2010) = 0.4 + 2.86 No of building approvals in 2006
Predictor Coef SE Coef T P
Constant 0.43 30.75 0.01 0.989
No of building approvals in 2006 2.863 3.996 0.72 0.492
S = 20.9572 R-Sq = 5.4% R-Sq(adj) = 0.0%
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23. MATH 1332 Minor Thesis
Unemployment
Unemployment rate (2006 - 2010)
7.0
Train Lines
6.0
% No Train lines
5.0
Melbourne
4.0
2006 2007 2008 2009 2010
Melbourne Train Lines No Train lines
General Linear Model: Unemployment Rates (%) versus Area, Year
Factor Type Levels Values
Area fixed 3 1, 2, 3
Year fixed 5 1, 2, 3, 4, 5
Analysis of Variance for Unemployment Rates (%), using Adjusted SS for Tests
Source DF Seq SS Adj SS Adj MS F P
Area 2 4.211 4.211 2.106 1.88 0.166
Year 4 12.864 5.793 1.448 1.29 0.289
Area*Year 8 0.856 0.856 0.107 0.10 0.999
Error 40 44.756 44.756 1.119
Total 54 62.687
S = 1.05778 R-Sq = 28.60% R-Sq(adj) = 3.62% 23
25. MATH 1332 Minor Thesis
CONCLUSION
Presented analysis results strongly suggest the following:
• Population living in regions of Victoria with established train services is,
on average, presented with better opportunity to obtain employment,
reach a higher wage and salary income and consequently buy or build
a house.
• Further development of more comprehensive rail network in regional
Victoria might be used as a means of achieving economic convergence
and provide an environment for more uniform economic development
across state.
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