The total financial loss resulting from the 124,000 killed and the millions more injured last year on the roads of the 29 most developed countries was the equivalent of 2 per cent of their entire economies, the Organisation for Economic Control and Development said.
The OECD - the group of 29 richest nations - said the cost was "unacceptable" and launched a programme of research to help cut the death toll.
Fatalities fell 6 per cent from 1997. The OECD said that in some countries, the death toll had fallen to levels last seen in 1956, despite the huge growth in traffic over the past four decades. "However, success in road safety is relative to the horrendous levels of road fatalities experienced in OECD member countries during the early Seventies, when fatalities were about 25 per cent higher than current levels," it said in a report posted on its website.
"To argue that 124,000 road fatalities represents a success story negates the huge personal and economic cost to society that results from a road crash."
OECD research showed the United States had the highest death toll, with 41,967 fatalities.
The death toll surged 80 per cent in Iceland, 16 per cent in Norway, 6 per cent in France and 3 per cent in Spain, while all the other countries cut the number of fatalities.
The OECD said a few countries reported that even after allowing for the effects of improved economic conditions for 1998 - economic recovery led to an increase in travel - there was still a rise in fatalities compared with 1997."Because of the multiplicity of factors that can contribute to road fatalities, it is difficult to determine the causes underlying such performances. Further analysis of other possible factors is strongly needed," it said.
The deal toll on Britain's roads fell 4 per cent, to 3,581 from 3,743. The greatest achievement was made in Korea, where fatalities were cut by 22 per cent, the Czech Republic, where they fell 15 per cent and in Austria and Canada, where they fell 13 per cent.
In Britain, it is understood the official spending watchdog is considering launching an inquiry into the amount of taxpayers' money spent on preventing and dealing with road accidents. The National Audit Office is worried too much is spent on treating crash victims and too little on road safety campaigns.
Crashes are estimated to cost the economy pounds 3bn a year in terms of ambulance call-outs, 3 million NHS bed days, follow-up medical care and time taken off work by the bereaved.
The Department for the Environment, Transport and the Regions directly spends pounds 100m on road safety. It currently gives a value of preventing a fatal accident at pounds 848,000, based on an assessment of the willingness of taxpayers to pay for the measures needed to prevent it. This method is seen as cynical by safety campaigners.