Railroads, Technology Adoption, and Modern Economic Development: Evidence from Japan

Abstract

Railroad access may accelerate technological progress in the industrial sector and induce structural change and urbanization - the two common features of modern economic development. By digitizing novel datasets of factories and railroad networks in late 19th- and early 20th-century Japan and using the cost-minimizing path between prioritized destinations as an instrument, I find that the distance from railroads in 1892 accounts for 38 percent of the growth in steam power adopted by factories from 1888 to 1902. I also find that proximity to railroads induced a structural change and changed the population dynamics. The results also support the view that railroad network construction was key to modern economic development in pre-First World War Japan.

Keywords: Railroads, Technology Adoption, Modern Economic Development

JEL Classification: N65, N75, O14, O18, O33