The Growth Contribution of Colonial Indian Railways in Comparative Perspective

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Abstract: Railways were an important driver of global economic growth in the 19th and early 20th centuries. While their role is well documented in industrial economies, we know less about their macro-economic impact in developing countries. In this paper, we first estimate the aggregate growth impact of Indian railways, one of the largest networks in the world in the early 20th century. Then, we compare their impact in India to four emerging Latin American economies (Argentina, Brazil, Mexico and Uruguay) and the Cape Colony. Using growth accounting techniques common to the crosscountry estimates, we argue the aggregate growth impact of Indian railways was significant, increasing Indian GDP per capita by 13.8% by 1912. We also find that the growth impact of Indian railways was similar to Brazil and Mexico, but smaller than Argentina and the Cape. Compared to the latter two, India had a smaller size of railway freight revenues in the economy and lower wages to fares leading to lower passenger time savings. Railways were the most important infrastructure driver of economic growth in India during first era of globalization from 1860 to 1912, but they contributed less than in richer and more dynamic developing economies.

Keywords: Globalization, Railways, Social Savings, India, Growth Accounting

JEL Classification: N7, O47, P52, R4

Cite as: Dan Bogart, Latika Chaudhary, Alfonso Herranz-Loncán, ‘The Growth Contribution of Colonial Indian Railways in Comparative Perspective’.