The Permanent Effects of Transportation Revolutions in Poor Countries: Evidence from Africa

We exploit the construction and eventual demise of the colonial railroads in Africa to study the impact of transportation investments in poor countries. Using Ghana and Sub-Saharan Africa as a whole, we assembled new data on railroads and cities spanning over one century to show that: (i) Railroads had large effects on the spatial distribution and aggregate level of economic activity during the colonial period, as they constituted a transportation revolution in a context where no modern transportation technology previously existed. (ii) These effects have persisted to date, although railroads collapsed and road networks expanded considerably in the post-independence period. The analysis contributes to our understanding of the heterogeneous impact of transportation investments. It shows that initial investments may have a large effect in poor countries with basic infrastructure. As the countries develop, increasing returns may then solidify their spatial distribution, and subsequent investments may have a smaller effect on local economic development.