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Too Late but Profitable: Railroads in Colombia during 1920-1950

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Listed:
  • Adolfo Meisel R.
  • María Teresa Ramírez G.
  • Juliana Jaramillo E.

Abstract

During the 1920s, the Colombian economy experienced the highest rate of growth in its history. The economic reforms of 1923 (the central bank, gold standard, banking legislation, fiscal reorganization), the coffee boom, and the unprecedented influx of foreign capital were the driving forces behind this success. During that decade, the country received 25 million dollars from the United States as compensation for its role in the separation of Panama from Colombia. Those reforms and the growth in coffee exports also allowed for an enormous increase in foreign loans. The value of the loans obtained by 1929 came to 257 million dollars. Those funds were used mainly to build much needed public infrastructure, particularly railroads. Approximately 45% of the foreign loans during that period were invested in railroad construction. Additionally, 16 of the 25 million dollars received as reparation for Panama were invested in railroads. In this paper, we estimate the global rate of return and the internal rates of return on individual railroads. For those calculations, we consider that Colombia ended up paying only around 85% of the loans obtained in the 1920s’s, owing to the effects of the Great Depression and the suspension of foreign debt payments . The rates of return on the railroads constructed and extended in the 1920´s are comparable to those obtained for European countries in the nineteenth century.

Suggested Citation

  • Adolfo Meisel R. & María Teresa Ramírez G. & Juliana Jaramillo E., 2014. "Too Late but Profitable: Railroads in Colombia during 1920-1950," Borradores de Economia 838, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:838
    DOI: 10.32468/be.838
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    References listed on IDEAS

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    1. Juan José Echavarría, 1982. "La deuda externa colombiana durante los 20s y los 30s. Algunas ensenanzas para el presente," Coyuntura Económica, Fedesarrollo, vol. 12(2), pages 85-119, July.
    2. Francisco José Ortega-Acosta & Adolfo Meisel-Roca & Jorge Enrique Ibánez-Nájar & Alejandro López-Mejía & Hernando José Gómez-Restrepo, 2023. "Banco de la República: antecedentes, evolución y estructura," Books, Banco de la Republica de Colombia, number 2023-isbn:9789586644488 edited by Mario Lombo-Vanegas & Rafael Isaza-Botero & Adolfo Meisel-Roca & Alejandro López-Mejía, December.
    3. Summerhill, William R., 1996. "Railroads and the Brazilian Economy Before 1914," The Journal of Economic History, Cambridge University Press, vol. 56(2), pages 464-467, June.
    4. Roberto Junguito & Hernán Rincón, 2004. "La Política Fiscal en el Siglo XX en Colombia," Borradores de Economia 318, Banco de la Republica de Colombia.
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    Cited by:

    1. Maria Paula Saffon & Fabio Sánchez, 2019. "Historical grievances and war dynamics: Old land conflicts as a cause of current forced displacements in Colombia," Documentos CEDE 17320, Universidad de los Andes, Facultad de Economía, CEDE.
    2. Gerardo della Paolera & Xavier H. Duran Amorocho & Aldo Musacchio, 2018. "The Industrialization of South America Revisited: Evidence from Argentina, Brazil, Chile and Colombia, 1890-2010," NBER Working Papers 24345, National Bureau of Economic Research, Inc.
    3. Ana María Iregui-Bohórquez & Ligia Alba Melo-Becerra & María Teresa Ramírez-Giraldo & Ana María Tribín-Uribe, 2020. "The path to gender equality in Colombia: Are we there yet?," Borradores de Economia 1131, Banco de la Republica de Colombia.
    4. Lucas Wilfried Hahn-De-Castro & Adolfo Meisel-Roca, 2018. "La desigualdad económica entre las regiones de Colombia, 1926-2016," Cuadernos de Historia Económica 47, Banco de la Republica de Colombia.

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    More about this item

    JEL classification:

    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean
    • N76 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Latin America; Caribbean
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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