Railway's Effects on Economic Development:A Quantitative Study on Modern Henan(1890s-1930s)

• Published in: China economist (Beijing, China) Vol. 11; no. 6; pp. 80 - 97
• Main Author: Shuang, Gao
• Format: Journal Article
• Language: Chinese; English
• Published: Beijing 中国社会科学院工业经济研究所 08.11.2016; Institute of Industrial Economics, Chinese Academy of Social Sciences
• Subjects: 19th century; Construction; Economic development; Population density; Railway networks; Regions; Rivers; late Qing Dynasty and early Republican Period; population density; welfare level; railway; market integration
• ISSN: 1673-8837

Different arguments on the relationship between railway construction and economic development exist in literature. As the railway construction of Henan in the period of late Qing Dynasty(1644-1911) and early Republic of China(1912-1949) provides a nearly natural experiment to throw new light on this topic, this paper creates county-level panel data for this period and conducts a further test with a difference-in-difference strategy. While the effect of railway is demonstrated to be positive in some literature yet negative in others, this paper identifies some major intergroup differences: railway lines put into service after the 1910 s and connecting central cities promoted population growth in regions along the railway lines, enhanced their capacity to cope with external market shocks, yet they did not improve integration with the intra-provincial market. By contrast, the railway lines put into operation in the 1930 s and connecting hinterland areas not only improved regional market integration but contributed to higher living standards as well. The implication is that the effects of railway are subject to the economic relations of various localities along the railway lines and the economic attributes of various sectors. thus railways cannot be generally defined to be positive or negative. This conclusion helps explain the disagreements in empirical studies and highlight the impact of railways on the regional economic structure.