Previous studies suggest that a minimal or restricted relationship exists between transportation and economic development. Conclusions drawn from these studies result from three factors. First, the studies considered the transportation-development relationship at substantially different geographical scales ranging from large-scale multistate regional studies to small land use projects. Second, at the subregional scale most studies used cross-sectional, correlational analysis; however, this type of analysis is unable to determine the direction of the relationship between the two variables. Third, the studies paid too little attention to the long delays inherent in transportation-development interactions. A method that examines the situations in which transportation investments seem to temporally precede changes in the local economy was used in this study. It was found for total employment by using vector autoregressions and causality tests that highways encourage long-term economic development in excess of the normal trend in Minnesota's regional centers and counties under the urban influence of the state.
