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Le Grand Paris. How would this project generate an economic growth?

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par Nicolas Saouaf
Reims management school - Master 2011
  

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B-c Logistic projects to export

As we have previously seen, the president qualified Le Have harbor as the main access of Paris to the sea. Indeed, one agency Antoine Grumbach & Associes has titles its project «Seine Metropole Paris Rouen Le Havre»115.

The agency has thought about a development between Paris and Le Havre harbour in order to increase
the competitiveness regarding the exports and imports costs. In this project, the creation of a high
speed train to connect the two areas and also the creation of different river ports would be the solution

112 Ibid, P.P 117

113 Sourced by Juan Pablo Bocajero, « Evaluation économique de l'impact des politiques publiques liées à la mobilité, le cas de Paris, Londres, Bogota et Santiago », Université Paris Est, 2008, P.P 36

114 Saurav Dev Bhatta, Matthew P. Drennan, «The Economic Benefits of Public investment in Transportation», P.P.289

115 Atelier Castro/Denissof/ Casi, Le Grand Pari(s), Consultation internationale sur l'avenir de la métropole Parisienne, P.P 125

to increase the exchanges between the companies located in Paris and Le Havre as the economic growth generates by this project will increase the number of companies present in this area.

As the president mentioned, the agency also placed Achères harbour at the centre of the fluvial policy. Indeed the connexion in Paris Ile-de-France to Le Havre Harbour would be located in Achères, because of the town location on the Seine and Oise rivers. Achères would become the Parisian logistic headquarter by stocking all the products coming from or going to Le Havre harbour by train or by ship, moreover its location would permit to be controlled by La Défense which could become the logistic decision centre on an European scale116.

The purpose of the development of High speed line will also be to connect it to the existing European High speed network in order to help the exports from Le Havre harbour to the rest of the continent. Because of the development of this line, station as La Défense could become important TGV station, the line Paris-London could be doubled by having TGVs passing by Amiens and Cergy-Pontoise117. According to the estimation of the agency, Le Havre-Paris journey would represent 1 hour thanks to the TGV.

The road projects aim to propose public transports on the high ways, in order to ensure the network development in this area. Because of the fluvial projects, the roads will not be the main way use by the companies to ensure their deliveries, as it is considered as less eco-friendly and more expansive118. Indeed A13 highway between Paris and Le Havre could be transformed by creating new delivery relays: individuals could go to these new centres and pick up products they ordered119.

The challenge for Paris in this case would be to become the main gate of Europe to the Atlantic Ocean, in order to compete with the Northern cities of Europe (Rotterdam).

The following map shows the project of connexion between Paris and Le Havre harbour.

116 Michèle Leloup, Marion Bertone, « Le Grand Paris, les coulisses de la consultation », 2009, P.P38 117Ibid, 2009, P.P38

118 Atelier Castro/Denissof/ Casi, Le Grand Pari(s), Consultation internationale sur l'avenir de la métropole Parisienne, P.P. 139

119 Michèle Leloup, Marion Bertone, « Le Grand Paris, les coulisses de la consultation », Archibooks, 2009, P.P38

120Figure 13: Connexion plan between Paris and Le Havre Harbour

According to the agency analysis, this project would lead to different impacts. First, it would emancipate Paris from the Rhine river, by developing the interdependence with La Seine river, which would permit the use of a French harbour.

The second point made by proposing this project would be an expansion of Paris toward Le Havre through Rouen. Indeed it would ensure existing industries, and would permit the development of new industries in this area. The connexions of these industries with Paris will be done by La Seine, and these industries will be able also to export easily their productions to foreign countries through Le Have Harbour121.

Hypothesis 2: Transport investments will be the main improvements on the economy

By analyzing the theoretical investment of the Greater Paris in transportation, we can understand how important will be its effects on the regional economy.

Savrav Dev Bhatta and Matthew P.Drennan have listed six possible economic benefits from a public investment in transportation:

1- «Increase in output;

2- Increases in productivity (output per unit of output)

3- Reduction in costs of production

120 Michèle Leloup, Marion Bertone, « Le Grand Paris, les coulisses de la consultation », 2009, P.P129

121 Atelier Castro/Denissof/ Casi, Le Grand Pari(s), Consultation internationale sur l'avenir de la métropole Parisienne, P.P. 130

4- Increases in income, property values, employment and real wages

5- Rate of return equal to or greater than the social costs of capital

6- Reductions in non commercial travel time, improved access, improved quality of life»122

Researches have been conducted in order to demonstrate these points. Indeed by using statistics and the linear regressions methods, it became possible to show the correlation between public investments and measure this impact (negative or positive impact and the scale of the impact).

Acording to the research, there is an increase of output measurable by gross state product (GSP), private GSP or manufacturing output. Conrad and Seitz (1994) have used different highways, rail, mass transit and airport to measure the public capital, and measure the economic benefit with the output in three sectors of Western German economy. The results found out were an increase of the output and productivity, and a reduction of the costs123.

Nevertheless, the effects of a public investment will have only a local effect. Indeed, Boarnet confirmed the positive effects of a highway on the private sector output in a region. He also showed that this highway will have an indirect impact on the neighboring regions, and a negative significant effect on private sector output124.

Alicia Munnel has found out a correlation in 1990, concerning the relation between public expenditures and productivity. Indeed, the author has shown that some investments have a strong relationship on the output of firms: transportation, water, gas and electricity are the most correlated factor to the productivity. Indeed her findings imply that a 1 percent increase in public (or private) capital will increase output by 0.35 percents. The author also mentioned that even public investments with a correlation statistically less significant on the productivity (as hospitals or schools), have still an important impact on the efficiency of the workers (more educated and healthy)125.

The public investments also have an impact regarding the cost of production. Indeed, Bhatta listed
nine researches showing a correlation between public expenditure and cost reduction, with an

122 Saurav Dev Bhatta, Matthew P. Drennan, «The Economic Benefits of Public investment in Transportation», Journal of planning education and research, 2003, P.P.289

123 Conrad,K. and H. Seitz, «The economic benefits of public infrastructure», Applied Economics 26, P.P 3303- 311 sourced by . Saurav Dev Bhatta, Matthew P. Drennan, «, The Economic Benefits of Public investment in Transportation», P.P. 290-292.

124 Boarnet M.G., « The direct and indirect economic effects of transportation infrastructure», University of California Transportation Center , n°340, 1996 P.P. 12

125 Munnell, A.H., « Why has productivity growth declined ? », New England Economic Review, 1990, P.P. 17

elasticity of -0.05 to -0.21 which concretely means a decline of 0.05 percents to 0.21 percents of the costs production for an increase of 1% of the public investment126.

Haughwout showed a correlation regarding house values and public investments in highway. Indeed, he found out a negative effect of the public investment expenditure regarding in Highway regarding the house values. Haughwout even specified that houses values located in the city centers will suffer more that houses located in the suburbs, as they do lost their location advantage127.

As we have seen, many advantages have been shown off with all these different studies. It is also important to see the quantified profits to the society of these policies. Different authors have worked on research to quantify the rate of return on public capital. Nadiri and Mamuneas have estimated a rate of return range from 4.9 percents to 7.2 percents128. According to the statistics, and regarding to our context, an investment of €30 billion Euros (budget to build new transports and improve the existing structures) this would represent an estimated return of €1.47 to €2.16. Also as previously mentioned, an investment of €22 billion of Euros just to create the new automatic public transports infrastructures in the Grand Paris project, would generate 690800 jobs, and companies affected by this project would gain €66 billion in sales, and the users would save €33 billion.

All these studies show how public/private investments in public transport could affect the Parisian (and Norman) economy. To conclude the hypothesis 2, we can say that yes, transport investment will be the main improve of the region regarding the project because of the results possible and expected.

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