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Big Social Savings in a Small Laggard Economy: Railroad-Led Growth in Brazil

Published online by Cambridge University Press:  15 March 2005

WILLIAM R. SUMMERHILL
WILLIAM R. SUMMERHILL
Affiliation:
Associate Professor, Department of History, University of California, Los Angeles, 6265 Bunche Hall, Box 951473, Los Angeles, CA 90095-1473.
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Abstract

Railroad development had a profound impact in nineteenth- and early-twentieth-century Brazil. Direct benefits were small for passengers, but large for freight services, and contributed heavily to the transition from stagnation to growth. Domestic-use activities received a differentially large stimulus. Estimates of the social rate of return reveal that Brazil did not overinvest in railroads. A different allocation of subsidies to railroad capital could have generated additional gains. Backward linkages did little for industry, but the “leakage” attributable to imported inputs was modest. Institutional externalities were mixed. By 1913 railroads had paved the way for dramatically improved economic growth.

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ARTICLES
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The Journal of Economic History , Volume 65 , Issue 1 , March 2005 , pp. 72 - 102
Copyright
© 2005 The Economic History Association

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