AC INFO

INVESTMENTS
AC INFO · 2/20
Investment in infrastructure,
especially in transport, is
extremely important for
GDP and production, and it is
possible to conclude that a
penny invested in the highway
results in three pennies of
value added.
JP Autoceste FBiH is currently realizing the most
significant investments in construction in the
Federation of BiH. The realization of investments
in the past two years has recorded a significant
growth, so the index of construction realization
increase is over 150% between 2018 and 2019, and
in 2020 the investment cycle of BAM 526 million
has been planned. There are currently eight active
construction sites on the highway on Corridor 5c,
and intensification of works is planned.
The relationship between initial consumption
(e.g., new investment in roads) and the total effects
generated by the initial investment is known as
the multiplier effect of additional consumption
on the economy. The impact that investments in
construction have on the increase of economic activity
and on economic growth is measured through the
production multiplier. According to the value of the
total production multiplier of 2.98, the construction
sector is ranked first among the sectors, which means
that investments in this sector have the greatest effect
on production in other sectors, i.e. total GDP.
Total investments of BAM 100 million in construction
works result in an increase in total production of all
sectors by BAM 298.44 million, out of which
• BAM 100 million direct additional consumption
or investments in the construction sector (direct
or initial effects)
• BAM 121.55 million increase in consumption
of all related sectors - direct and all other
additional suppliers - needed to realize
additional production or investments in the
construction sector (indirect production effects)
• BAM 76.88 million additional production
required to meet the increase in household
consumption (additional income-induced
effects).
In addition to the economic effects that are
directly measurable by the production multiplier,
investments in highways have some other effects
that are equally important, and relate to the area -
the region in which the highway is built.
General benefits
for users
Travel time
savings
Increased safety
Vehicle operating
costs
Economic benefits
for the region
Business expansion
of the region
Business attractiveness
Tourism
As can be seen from the table, the importance
of investment for economic development is not
only in the direct increase in production and
income provided by new capacities. An increase
in investment means an increase in the capital
equipment of labor, which affects the increase in
production, i.e. national income on the supply side.
The traffic-bound region is becoming more attractive
for both business and housing, and in most cases
is experiencing a decline in the unemployment rate,
positive migration, an increase in the number of
companies and an increase in the capacity for tourist
accommodation.
When it comes to the general benefits of highway
construction for users and for the region, the main
benefits are savings in travel time, but also increased
traffic safety. Increased traffic safety has a direct effect
on the economy, because numerous studies have
shown that about approx. 3% of GDP (the example of
Poland) goes to the cost of traffic accidents. Reducing
the cost of accidents is also achieved through the use
of intelligent transport systems.
If we look at the investments that were realized
by JP Autoceste FBiH for 2018 and 2019, and the
investments that are planned in 2020, we can see
that the direct effect on the economy is approx. BAM
800 million. (Graph 1)
Based on these data and the value of the multiplier,
it is possible to calculate the total effect of highway
investments on the economy. (Graph 2)
The effects of investments on the economy (direct,
indirect and induced) from what has been invested
so far in the last two years is approx. 1.3 billion, and
what is planned to be invested this year is more
than BAM 2.3 billion. This means that highway
construction has a direct effect on the amount
2018. 2019. 2020.
invested by increasing the value of production
in construction, an indirect effect by increasing
production in related industries, where suppliers
belong to an industry that has increased production
as well as effects due to increased consumption of
all industries which are indirectly related to the
observed industry, and the induced effect because
the consumption of the population that earns higher
income increases thanks to this investment.
In addition to current investments, it is very important
to emphasize that JP Autoceste of the Federation is
launching a new investment cycle, which is planned
to start the construction of other undeveloped
sections on Corridor 5c. The investment between
the Ovčari Loop and Mostar south Loop is estimated
at approx. 800 million euros, and when it is realized,
an additional 50 km of highway will be built. Also, it
is planned to continue investing and construction on
the northern part of the Corridor 5c highway, and this
investment will be over 300 million euros. The effect
of these investments on the economy will be over 3.3
billion euros and will significantly affect economic
activity, growth, development and employment in
the Federation of BiH.
The entire investment in infrastructure, especially
transport, is extremely important for GDP and
production, and it is possible to conclude that one
brand invested in the highway results in three
brands of added value created in all sectors. In
addition to the positive economic indicators, it
is important to emphasize that the benefit that
the region has from the highway is long-term.
Contractors, subcontractors, suppliers, the state, but
also the entire population of the area through which
the highway passes feel numerous benefits through
increased revenues, lower unemployment, better
transport connections and greater development
potential of the region in terms of competitiveness
and accessibility.
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BULLETIN OF JP AUTOCESTE FBIH