Transportation Technology and Economic Change: The Impact of Colonial Railroads on City Growth in Africa

What is the impact of modern transportation technology on economic change in poor countries? Rail construction in colonial Africa provides a natu-ral experiment. Using new data on railroads and cities over one century within one country, Ghana, and Africa as a whole, we ï¬nd large permanent effects of transportation technology on economic development. First, railroads had strong effects on agriculture and urbanization before independence. Second, using the fact that railroads collapsed post-independence, we show they had a persistent impact. Evidence suggests that railroad cities persisted because their emergence served as a mechanism to coordinate investments for each subsequent period. Historical shocks can thus trigger an equilibrium in which cities will emerge to facilitate the accumulation of factors, which promotes long-term development.