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The contribution of railways to economic growth in Latin America before 1914: a growth accounting approach

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  • Herranz-Loncan, Alfonso
Abstract
Railways are usually considered as one of the most important innovations that fostered the transition of Latin America to economic growth before 1914. The social saving estimates that are available for several Latin American countries seem to confirm that view. However, the interpretation of the results of the social saving literature is not straightforward, since the comparison among social savings calculated for different countries and years may be troublesome, and the actual meaning of the social saving estimates is not clear. This paper suggests an alternative approach to the economic impact of railways in Latin America. It presents estimates of the direct growth contribution of the railway technology in Argentina, Brazil, Mexico and Uruguay before 1914, which are calculated on the basis of the growth accounting methodology. The outcomes of the estimation indicate that railway effects on Uruguayan economic growth were very low. By contrast, in the other three cases under study (Argentina, Mexico and Brazil) the railways provided huge direct benefits. In Argentina and Mexico, these amounted to between one fifth and one quarter of the total income per capita growth of the period under analysis. By contrast, in the case of Brazil, the outcomes of the analysis indicate that the direct contribution of railways to growth would have been higher than the whole income per capita growth of the Brazilian economy before 1914. This unexpected result might suggest that the national level is not the most adequate scale to analyse the economic impact of network infrastructure in the case of large, geographically unequal and insufficiently integrated developing economies.

Suggested Citation

  • Herranz-Loncan, Alfonso, 2011. "The contribution of railways to economic growth in Latin America before 1914: a growth accounting approach," MPRA Paper 33578, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:33578
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    References listed on IDEAS

    as
    1. Nicholas Crafts, 2004. "Steam as a general purpose technology: A growth accounting perspective," Economic Journal, Royal Economic Society, vol. 114(495), pages 338-351, April.
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    3. Crafts, Nicholas, 2010. "The contribution of new technology to economic growth: lessons from economic history," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 28(3), pages 409-440, December.
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    6. Fogel, Robert William, 1979. "Notes on the Social Saving Controversy," The Journal of Economic History, Cambridge University Press, vol. 39(1), pages 1-54, March.
    7. Oliner, Stephen D. & Sichel, Daniel E., 2003. "Information technology and productivity: where are we now and where are we going?," Journal of Policy Modeling, Elsevier, vol. 25(5), pages 477-503, July.
    8. Metzer, Jacob, 1984. "Railroads and the Efficiency of Internal Markets: Some Conceptual and Practical Considerations," Economic Development and Cultural Change, University of Chicago Press, vol. 33(1), pages 61-70, October.
    9. Dobado, Rafael & Marrero, Gustavo A., 2005. "Corn Market Integration in Porfirian Mexico," The Journal of Economic History, Cambridge University Press, vol. 65(1), pages 103-128, March.
    10. Herranz-Loncán, Alfonso, 2006. "Railroad Impact in Backward Economies: Spain, 1850–1913," The Journal of Economic History, Cambridge University Press, vol. 66(4), pages 853-881, December.
    11. Ramírez, María Teresa, 2001. "Los ferrocarriles y su impacto sobre la economía colombiana," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 19(1), pages 81-122, March.
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    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economic History > Regional Economic History > Latin American Economic History > Economic History of Mexico

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    More about this item

    Keywords

    Railways; Latin America; Economic Growth;
    All these keywords.

    JEL classification:

    • N76 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Latin America; Caribbean

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