The Growth Contribution of Colonial Indian Railways in Comparative Perspective

It is widely recognized that railways were one of the most important drivers of economic growth in the 19th and 20th century, but it is less recognized that railways had a different impact across countries. In this paper, we first estimate the growth impact of Indian railways, one of the largest networks in the world circa 1900. Then, we show railways made a smaller contribution to income per-capita growth in India compared to the most dynamic Latin American economies between 1860 and 1912. The smaller contribution in India is related to four factors: (1) the smaller size of railway freight revenues in the Indian economy, (2) the higher elasticity of demand for freight services, (3) lower wages, and (4) higher fares. Our results suggest large disruptive technologies such as railways and other communication technologies can generate huge resources savings, but may not have large growth impacts