Empirical analysis of the factors behind rail infrastructure investment

By using a data set of 536 observations from 29 OECD countries for the 19 years from 1995 to 2013, this study investigates the factors affecting rail investment with panel data analysis. Among the pooled OLS, the fixed effects, and the random effects models, the fixed effects model is selected by statistical test. It seeks to clarify how investment is related to factors such as demand, managerial, and regulatory factors. The main results are as follows: (i) factors positively affecting investment are output as a measure of train-km, capital stock as network length, GDP per capita, and the competitiveness of passenger railways; (ii) the competitiveness of freight railways has a negative relationship with investment; (iii) the highspeed train ratio itself is not significant; (iv) a larger government debt ratio tends to weakly decrease investment; (v) accident rate has a weak positive relationship with investment, but as the government debt ratio increases, the accident rate's effect on investment decreases; (vi) among regulatory factors, investment weakly increases, as values of three indexes (the ratio of public ownership, vertical integration, and overall regulation) become larger; and (vii) deregulation of entry and greater competition in the market do not relate to investment. In conclusion, strong economic conditions such as GDP and the competitive situation in passenger rail are important for investment, but regulatory conditions are not.