- The document discusses capital investment and infrastructure needs in New England. It finds that capital accumulation has been low in Maine, Rhode Island, and Vermont compared to other New England states. Infrastructure like bridges, roads, and highways is in poor condition across the region. - Public capital investment has also been low, with New England states spending less per worker on transportation infrastructure than the national average. The region faces an infrastructure funding gap, with billions more needed to meet average US spending levels. - Public-private partnerships are proposed as a way to help address capital and infrastructure needs, but few PPP laws and projects currently exist in New England states. More can be done to develop legislation and mechanisms to leverage private investment through

1. Is there a Capital Problem
in New England?
Edi Tebaldi, Ph.D.
Associate Professor of Economics
Bryant University & New England Economic Partnership
Prepared for: Economic Perspectives on State and Local Taxes

2. Why worry about capital investments?
• Under knowledge/technology diffusion, the stock & quality of the
stock of capital determines labor productivity & economic growth.
• Capital-embodied technology = quality of capital
• Capital Investment must enhance the infrastructure to foster growth
and productivity.
• Capital improvement projects are region-specific and must be aligned
with market trends.
• Federal, state, and local funds for infrastructure constrained.
• No evidence of “reverse crowding out effect” in infrastructure.
• Poor infrastructure, particularly highways & bridges.

3. Be aware of bridges across New England!
37.8%
43.4%
44.7%
40.7%
44.6%
52.0%
70.3%
55.2%
23.9%
31.4%
32.1%
32.9%
34.5%
39.5%
52.2%
56.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
% Bridges Structurally Deficient and
Functionally Obsolete
1992 2014
23.6%
18.9%
15.6%
21.7%
18.8%
21.4%
15.9%
19.8%
7.5%
8.9%
9.0%
10.0%
10.7%
13.1%
15.0%
22.7%
0%
5%
10%
15%
20%
25%
% Bridges Structurally Deficient
1992 2014
Source: Federal Highway Administration (FHWA), U.S. Department of Transportation.

4. …. and of roads &
highways!
State
Vehicle travel
increase from
1990 to 2013
(%)
Major
urban
highways
congested,
2013 (%)
Major roads
in poor
condition,
2013 (%)
CT 18 58 34
ME 19 na 25
MA 22 38 11
NH 31 51 22
RI 11 37 37
VT 22 na 25
New England 21 na 26
State
Commodities
transported by
trucks
Commodities
delivered by
USPS/ courier
(multiple
modes)
$ Amount,
2013
CT 73% 18% $143 billion
ME 81% 10% $31 billion
MA 71% 22% $212 billion
NH 63% 26% $38 billion
RI 79% 18% $29 billion
VT 80% 14% $18 billion
New England 75% 18% $371 billion
Source: Tripnet.org Source: Tripnet.org
…. which New England
badly needs to function

5. Capital Per Worker:
A Pillar for Growth
(2000 US$) Rank
Annual Growth
Rate
State 1990 2007 1990 2007
1990-
2007
Rank
CT 80,206 106,942 9 4 1.7% 3
ME 61,168 61,602 39 49 0.0% 41
MA 72,497 94,256 18 9 1.5% 6
NH 65,591 78,814 30 18 1.1% 15
RI 56,939 72,187 46 30 1.4% 9
VT 60,186 68,252 42 40 0.7% 21
United States 73,157 86,457 1.0%
New England 71,347 90,361 1.2%
61,602
68,252
72,187
78,814
86,457
90,361
94,256
106,942
-
20,000
40,000
60,000
80,000
100,000
120,000
Capitalperworker(2000US$)
Stock of Capital Per Worker Stock of Capital Per Worker, 2007
Source: Author’s calculations using data from Yamarik (2013) and U.S. Bureau of Labor Statistics.

6. Low Public Capital Investment Across New
England States
(2013 US$) Rank
Annual Growth
Rate
State 1992 2013 1992 2013
1992-
2013
Rank
CT 1,924 1,844 16 31 -0.2% 37
ME 1,460 1,473 40 45 0.0% 34
MA 1,428 1,891 43 26 1.3% 11
NH 1,078 1,314 50 48 0.9% 18
RI 1,693 1,237 24 49 -1.5% 48
VT 1,174 1,416 40 46 0.9% 19
United States 1,791 2,009 0.5%
New England 1,537 1,727 0.6%
Public Capital Outlay Per Worker Public Capital Outlay Per Worker, 2013
Source: Author’s calculations using data from U. S Census Bureau and U.S. Bureau of Labor Statistics.
1,237
1,314
1,416
1,473
1,727
1,844
1,891
2,009
-
500
1,000
1,500
2,000
2,500
PublicCapitalOutlayperworker

7. Low Public Spending with Transportation
Across New England States
(2013 US$) Rank
Annual Growth
Rate
State 1992 2013 1992 2013
1992-
2013
Rank
CT 1,244 1,062 29 43 -0.75% 46
ME 1,346 1,636 22 13 0.93% 14
MA 929 1,034 45 46 0.51% 24
NH 1,005 1,331 41 32 1.34% 7
RI 972 967 44 48 -0.03% 40
VT 1,623 2,452 9 4 1.96% 4
United States 1,188 1,378 0.71%
New England 1,083 1,176 0.39%
Public Transportation Spending Per Worker Public Transportation Spending Per Worker,
2013
Source: Author’s calculations using data from U. S Census Bureau and U.S. Bureau of Labor Statistics.
967
1,034
1,062
1,176
1,331
1,378
1,636
2,452
0
500
1,000
1,500
2,000
2,500
3,000
PublicTransporationCapitalOutlayper
worker

8. Closing the Capital Gap across states
AL
AK
AZ
AR
CA
CO
CT
DEFL
GA
HI
ID
IL
IN
IA KS
KY
LA
ME
MD
MA
MI
MNMS
MO
MT
NE
NV
NH NJ
NM
NY
NC
ND
OH
OK
OR
PA
RI
SCSD
TN
TX
US
UT
VT
VA
WA
WV
WI
WY
-.02-.010.01.02
GrowthinCapitalperworker,1990-2007
11 11.2 11.4 11.6 11.8 12
ln Capital per worker, 1990
AL
AK
AZ
AR
CA
CO
CT
DE
FL
GA
HI
ID
ILIN
IA
KS
KY
LA
ME
MD
MA
MI
MN
MS
MO
MT
NE
NV
NH
NJ
NM NY
NC
ND
OH
OK
OR
PA
RI
SC
SD
TN
TX
US
UT
VT
VA
WA
WV
WI
WY
-.04-.020.02
GrowthinPublicCapitalOutlayperworker,1992-2013
11 11.2 11.4 11.6 11.8 12
ln Capital per worker, 1990
Source: Author’s calculations using data from Yamarik (2013) and U.S. Bureau of Labor Statistics.
Are states with low stock of capital per worker
catching up?
Are State Governments steeping in to close the
capital gap?

9. Takeaway
• The private sector has been the main driver of capital growth
in Massachusetts, Connecticut, and New Hampshire;
• Low capital accumulation in Rhode Island, Maine and
Vermont;
• Poor infrastructure across New England states;
• Low public capital investment across New England states;
• Transportation infrastructure has been neglected
•Can New England states TAX their way out of the
infrastructure gap?

10. How much more do New England states need
to close the public capital investment gap?
Additional public capital Investment required to
achieve “per worker” level of:
($ Million, 2013)
% Change in 2013 public capital
investment required to achieve “per
worker” level of:
State Top 10 Average US Average Top 10 Average US average
CT 2,317 273 76% 9%
ME 1,065 322 120% 36%
MA 4,549 397 72% 6%
NH 1,236 444 147% 53%
RI 947 364 162% 62%
VT 561 182 129% 42%
New England 10,677 1,984 88% 16%
Source: Author’s calculations using data from U. S Census Bureau and U.S. Bureau of Labor Statistics.

11. Can PPPs address New England’s Capital &
Infrastructure Needs?
• Public-Private Partnerships (PPPs)
• “a long-term contract between a private party and a government entity, for
providing a public asset or service, in which the private party bears significant risk
and management responsibility, and remuneration is linked to performance". ( World
Bank)
• Greenfield projects: new-build.
• Brownfield projects: existing assets.
• New England is behind the curve on PPPs
• No legislation to enable PPPs in NH, RI & VT ( source: NCSL)
• Project-specific legislation in CT (source: NCSL).
• Little activity in CT & MA (Route 3 Express PPP in MA);
• Engage policymakers to create legislation & mechanisms to foster
and leverage PPPs in New England.

12. Thank you
etebaldi@Bryant.edu