A cross-country analysis of road infrastructure investments and road safety in the EU

Abstract

Road traffic accidents constitute a critical global health issue, resulting in significant loss of life and substantial economic costs. This dissertation explores the relationship between road infrastructure investments and road safety across sixteen EU countries from 1997 to 2020. By applying panel data econometrics, the study analyses how expenditures on road infrastructure and maintenance influence road traffic fatalities and casualties. This relationship is inherently complex and influenced by a variety of factors. Therefore, the model includes key control variables such as the motorisation rate, road density, GDP per capita, the proportion of youth aged 20-24, and the percentage of the population living in urban areas. Two separate regression models are estimated; one with road traffic fatalities as the dependent variable and the other with the logarithm of casualties. For both models, Pooled OLS, Fixed Effects and Random Effects regressions are conducted. The two-way Fixed Effects approach is selected as the preferred model specification. To address econometric challenges such as autocorrelation, cross-sectional dependence and heteroscedasticity, Driscoll-Kraay standard errors are applied. The results suggest that while construction investment initially leads to an increase in road fatalities and casualties in the year of spending, it has a positive impact on road safety with a one-year lag. In contrast, maintenance spending reduces both fatalities and casualties in the year it is allocated, but exhibits mixed effects in the following year, raising fatalities while continuing to decrease casualties.