Big Push or Big Grab? Railways, Government Activism and Export Growth in Latin America, 1865-1913

51 Pages Posted: 28 Sep 2013

See all articles by Vincent Bignon

Vincent Bignon

Banque de France

Rui Esteves

Graduate Institute of International and Development Studies (IHEID)

Alfonso Herranz‐Loncán

University of Barcelona

Multiple version iconThere are 2 versions of this paper

Date Written: September 2013

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.

Keywords: Railways, Latin America, Export growth, Government revenues

JEL Classification: H54, N46, N76, O38, O54

Suggested Citation

Bignon, Vincent and Esteves, Rui and Herranz-Loncan, Alfonso, Big Push or Big Grab? Railways, Government Activism and Export Growth in Latin America, 1865-1913 (September 2013). Available at SSRN: https://ssrn.com/abstract=2331992 or http://dx.doi.org/10.2139/ssrn.2331992

Vincent Bignon (Contact Author)

Banque de France ( email )

DGEI 49-1430
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Paris, 75001
France
+33142924330 (Phone)

Rui Esteves

Graduate Institute of International and Development Studies (IHEID) ( email )

PO Box 136
Geneva, CH-1211
Switzerland

Alfonso Herranz-Loncan

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

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