Transport investment and regional economic development in rapidly developing countries Insights from Nepal

With an unprecedented increase in transport investment demand, developing countries face serious challenges to adequately and equitably distribute their limited resources across regions. Transport infrastructure investment is often considered a tool to promote regional economic development, however, it remains unclear how and by what mechanisms transport infrastructure investment impacts regional economic development. This thesis responds to this gap by contributing a conceptual as well as practical understanding of the role of transport investment in regional economic development, considering the specificities of developing countries, including case studies from Nepal. By employing a mixed-methods research design and analyzing numerous data sources – academic literature, historical statistics, sectoral plans, and planners’ interviews – this thesis generates the following four key insights. First, the impact of transport investment in regional economic development is complex and dynamic; therefore, it should not be seen as a standalone, sectoral intervention. Instead, it can be considered an instrument for spatial and urban development and beyond. Second, the spatio-temporal investment in transport infrastructure shapes the size and regional distribution of cities, which further shapes regional economic structures; therefore, the timing and location of infrastructure investment should be carefully evaluated. Third, transport investment planning should follow the framework of the national spatial development plan focusing on reducing the urbanization gap across regions, which ultimately helps to reduce regional income inequality. Fourth, although establishing transport connectivity is a prerequisite for urban and regional economic development, it may not always be sufficient and should be integrated with complimentary soft policies such as innovation and institutions (e.g., university, hospital, industry location) to promote robust urban development.