The Long Shadow of Infrastructure Development: Long Run Effects of Railway Construction in Colonial India

Abstract

This paper examines the long-term impacts of infrastructural investment. It considers the case of British investment in railway infrastructure in colonial India. Railways had an immediate impact on trade and development in the predominantly agricultural India. In this paper, we show that the positive effects of railways have persisted over more than a century. Districts of the Indian sub-continent that were connected to railways earlier continue to have higher levels of economic prosperity and lower rural poverty rates a century later. Men and women residing districts connected earlier are less likely to be uneducated or malnourished. Districts further away from connected districts are worse o in terms of levels of economic development in 2013. The corresponding IV estimates are larger in magnitude than the OLS estimates indicating that the OLS estimates provide a lower bound to the effect of exposure to railways on long run prosperity. The persistent effects appear to be driven by agglomeration due to early exposure to trade and globalization as a result of connectedness.