Department of Economics

The Impact of Colonial-era Railroads on Economic Activity and Geography over 100 years

Out of Africa: how have colonial railways defined Africa's economic geography and what we can learn from them?

One of the key questions facing international development organisations is: How to promote economic development in Africa?  A considerable chunk of the World Bank’s recent lending (20% in 2011) is financing transportation infrastructure projects. Of course, Africa has suffered a massive infrastructure deficit, yet little is known about the economic impact of roads and railroads. Is transportation infrastructure the path to long-term economic development in Africa?

Summary

Two studies by Dr Alexander Moradi examine the impact of colonial-era railroads on economic activity and geography over 100 years.

1) History, Path Dependence and Development: Evidence from Colonial Railroads, Settlers and Cities in Kenya and

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

Using Ghana and Kenya as case studies, the research explores whether railroad investments transform Africa’s economic geography, i.e. were railroads instrumental so that without them the economic outcome would have been different and development delayed?

Each case study gathers information to locate where the railroads were built and when, the emergence of urban centres, patterns of economic development including the decline of the railroads, long-run economic change both pre and post independence and channels of path dependence.

Methodology

The case studies of Ghana and Kenya produce a new data sets on railroads and city growth at a fine spatial level over one century in Ghana and Kenya and Africa as a whole, creating a framework to analyse the relationship between history, path dependence and development.

Key findings

The findings show that infrastructure investments can produce economic change and have a long-lasting influence urban and development patterns:

  • The construction of the colonial railroad determined the location of cities at independence.
  • Railroads declined left after independence, yet cities persisted, mainly because their early emergence served as a mechanism to coordinate investments in the colonial and subsequent periods.
  • Railroad cities are wealthier than non-railroad cities of similar sizes today. This suggests that shocks to economic geography can trigger an equilibrium in which cities will emerge to facilitate the accumulation of factors, and thus have long-term effects on economic growth.

These results have several implications:

  • Modern transportation technology can produce economic change in poor countries by reducing trade costs, integrating markets and facilitating the circulation of ideas.
  • The economic impact of a new transportation technology will depend on the previously used technologies; the greater the difference between the old and the new technology, the greater the impact will be. Nevertheless, new investments could still have strong positive effects in poor, remote regions with high trade costs. They could permit increased commercialization of agriculture, start an urbanization process, and lay out the foundations of future industrialization.
  • The effects of new investments in transportation infrastructure in poor, remote regions is likely to depend on their intrinsic economic potential, suggesting that the effects of investments in transportation infrastructure are conditional on the context in which they take place.

Access the paper

History, Path Dependence and Development: Evidence from Colonial Railroads, Settlers and Cities in Kenya, by Remi Jedwab, Edward Kerby and Alexander Moradi. CSAE Working paper 2014-04

Transportation Technology and Economic Change: The Impact of Colonial Railroads on City Growth in Africa, by Remi Jedwab and Alexander Moradi. CSAE Working paper 2013-07