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Big push or big grab? Railways, government activism, and export growth in L atin A merica, 1865–1913
Author(s) -
Big Vincent,
Esteves Rui,
HerranzLoncán Alfonso
Publication year - 2015
Publication title -
the economic history review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.014
H-Index - 49
eISSN - 1468-0289
pISSN - 0013-0117
DOI - 10.1111/ehr.12094
Subject(s) - boom , government (linguistics) , revenue , latin americans , government revenue , business , economics , finance , economy , political science , engineering , environmental engineering , philosophy , linguistics , law
Railways were one of the main engines of the L atin A merican trade boom before 1914. Railway construction often required financial support from local governments, which depended on their fiscal capacity. However, since the main government revenues were trade‐related, this generated a two‐way feedback between government revenues and railways, with a potential for multiple equilibria. The empirical tests in this article support the hypothesis of such a positive two‐way relationship. The main implication of our analysis is that the build‐up of state capacity was a necessary condition for railway expansion and also, to a large extent, for export expansion in Latin America during the first globalization.