Transportation Infrastructure and Economic Growth in a Dissolving Country: (Ir)relevance of Railroads in the Ottoman Empire

Abstract

In the literature, there are few studies on the impacts of the railroad construction in the Middle Eastern countries as well mixed findings. Using the data on the population of judicial districts in the Ottoman Empire between 1893 and 1914, we examine the relationship between railroad access and economic growth in local economies. Our empirical results show the size expansion in the affected areas of railroad access. This suggests the presence of positive impact of railroads on economic growth through increasing employment opportunities and fertility rates. To deal with endogeneity problems, we use instrumental variable (IV) strategy. Our 2SLS results also indicate that the causality runs from access to railroads to population growth. The paper contributes to the previous empirical literature by providing evidence for an agricultural society with limited factor mobility due to the lack of transportation infrastructure.