I’ve gotten increasingly interested in the ways in which geography shapes economic development, and vice versa. For instance, in a video for MRUniversity called Transportation & Infrastructure in the 19th century, I discuss the difficulties of transportation in 19th Century Mexico and why railroads took so long to get established. Here’s some notes from the video:
Cardenas (1997, 78) notes that as late as 1877, when Porfirio Diaz took over the Presidency, Mexico only had 684 km of railroad track and most of that covered the traditional route from Veracruz to Mexico City.
It had taken more than 40 years to build that track and according to a contemporary American observer it had been an extremely costly endeavor: “Due to the wasteful methods of its construction, to its many extrinsic misfortunes, and to the enormous outlay of money required by the very difficult character of the work, this railway in proportion to its length, is one of the costliest railways in the world.” (Pletcher, 1950, 56).
There’s a new working paper on a similar topic called “Big Push or Big Grab? Railways, Government Activism, and Export Growth in Latin America” that I’m looking forward to reading this weekend. The authors are Vincent Bignon, Rui Esteves, and Alfonso Herranz-Loncán and here’s the abstract:
Railways were one of the main engines of the Latin American trade boom before 1914. Railway construction often required financial support from local governments, which depended on their fiscal capacity. But since the main government revenues were trade-related, this generated a two-way feedback between government revenues and railways with a potential for multiple equilibria. The empirical tests in this paper support the hypothesis of a positive two-way relationship. The main implication of our analysis is that the build-up of state capacity was a necessary condition for railway expansion and, given the importance of the export sector in these economies, for economic growth and divergence in the region.
Cárdenas, Enrique, 1997, A Macroeconomic Interpretation in Nineteenth-Century Mexico, in Stephen Haber (Ed.) How Latin America Fell Behind: Essays on the Economic Histories of Brazil and Mexico (Stanford University Press).
Pletcher, David M., 1950, The Building of the Mexican Railway, The Hispanic American Historical Review 30(1): 26-62.