1 Many states nationalized portions of their railroad network between 1860 and 1912. This paper u... more 1 Many states nationalized portions of their railroad network between 1860 and 1912. This paper uses new cross-country data to examine which factors contributed to nationalizations and how nationalizations influenced network expansion. I find evidence that nationalizations were greater in countries with low constraints on the executive branch, with French and German civil law systems, and where neighboring countries had higher military capability. I also find evidence that nationalizations reduced mileage growth. The results suggest that external military threats increased the appeal of nationalizations, while legal and political institutions influenced their costs. They also suggest that nationalizations reduced investment incentives.
How does the development of one transport mode influence the development of another? This paper u... more How does the development of one transport mode influence the development of another? This paper uses time-series data to test whether inter-model network externalities influenced the development of road, canal, and port infrastructure in England from 1760 to 1830. The main finding is that road development had a positive effect on canal development. The results suggest that the option value of investing in a canal in the future diminished when nearby road improvements were initiated because there was less uncertainty about future profits from canal tolls. They also suggest a reinterpretation of road transport in the Industrial Revolution and point to the general importance of inter-modal network externalities.
The Glorious Revolution has been linked with Britain‘s economic development in the eighteenth cen... more The Glorious Revolution has been linked with Britain‘s economic development in the eighteenth century. This paper examines its impact on early transport improvements. First, it shows that several road and river undertakers in the 1600s had their rights violated because of political changes and actions taken by the Crown or Parliament. Second, it shows that the likelihood of rights violations was lower after 1689. Third, it uses structural breaks tests to demonstrate that the level of road and river investment was substantially higher after the mid-1690s. Together the evidence suggests that the institutional changes following the Glorious Revolution reduced political risk and uncertainty for infrastructure undertakers and that they responded by proposing and financing more projects.
We thank Hans-Joachim Voth, Albretch Ritchsel, and participants in the EREH Fast-track conference... more We thank Hans-Joachim Voth, Albretch Ritchsel, and participants in the EREH Fast-track conference in Paris for advice, encouragement, and comments. We also thank two anonymous referees who provided excellent comments in an extremely timely-manner. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
A new database containing all acts passed between 1600 and 1815 demonstrates that during the cent... more A new database containing all acts passed between 1600 and 1815 demonstrates that during the century preceding the Industrial Revolution, Parliament passed increasing numbers of acts altering property rights and encouraging the provision of public goods. The acts enabled individuals to sell, mortgage, lease, and improve land previously bound by legal legacies; granted rights to organizations, such as turnpikes and canal companies, which supplied infrastructure and public services; and replaced traditional agricultural rights with enclosed fields and individual property. The depth and detail of the database enables us to document these trends and discuss their effects on English economic development.
This Draft June 2012 The Glorious Revolution of 1689 is one of the most hotly debated political t... more This Draft June 2012 The Glorious Revolution of 1689 is one of the most hotly debated political transitions in history. Recent analysis of the Glorious Revolution centers on the role of the Whig party and the significance of party politics. We study how these factors affected market access in the infrastructure sector and identify whether Britain was still a limited access order in the decades after the Glorious Revolution. Using an extensive new data set we show the identity of the party in power and the local density of ruling party representation affected whether constituencies got acts of Parliament authorizing the improvement of infrastructure. A key reason is that ruling parties protected vested interests or limited entry to their supporters. Our main conclusion is that Britain was still a limited access order. The results have implications for Britain's economic development and for the study of access to organizations more generally.
Railways were integral to the development of the Indian economy before World War I. In this paper... more Railways were integral to the development of the Indian economy before World War I. In this paper, we present new estimates of total factor productivity (TFP) for railways from 1874 to 1912, which highlight the strong performance of this key industrial sector. We find railway-industry TFP growth to be substantial, averaging 2.6 percent per year and generating a 3 percent social savings for the Indian economy. A combination of factors contributed to TFP growth including greater capacity utilization, technological change, and improvements in organization and governance. The larger conclusion is that railways had higher TFP growth than most sectors in India and compared favorably with TFP growth for railways in other countries.
The performance of Indian railways in the nineteenth century provides a great context to study th... more The performance of Indian railways in the nineteenth century provides a great context to study the effects of state ownership on productivity and other aspects of operations. We rely on a key feature of the institutional background whereby the Government of India purchased a majority ownership stake in private railways at predetermined dates set by contracts negotiated decades before the companies came under state ownership. Controlling for individual railway fixed effects, year fixed effects, and railway-specific time trends, we find no evidence of a decline in TFP following state takeovers of private companies. Instead of reducing productivity, as the recent experiences with privatization would suggest, we find that the Government of India maintained productivity when it became the owner of railways. Government ownership influenced certain areas of operations such as the capital-labor ratio, but not others such as fares. This suggests the state was able to achieve similar producti...
There is a growing consensus that institutions are linked with economic development, but identify... more There is a growing consensus that institutions are linked with economic development, but identifying the effects of institutional changes has proven to be difficult. This book offers new insights by studying the role of political and legal changes in fostering investment during the early transportation revolution in England. First, it argues that the political settlement between Crown and Parliament made improvement rights more secure and increased incentives for investment. Conflict between political parties had little effect however. Second, it argues that greater competition for seats in the Commons contributed to investment by lowering the cost of obtaining transportation improvement rights. The effects of electoral competition changed, however, depending on whether MPs belonged to the majority party. Third, the book argues that the empowerment of juries in eminent domain proceedings had mixed effects. Juries lowered incentives by granting compensation well above the market valu...
tween transportation improvements and the English Industrial Revolution. One of the central quest... more tween transportation improvements and the English Industrial Revolution. One of the central questions is why greater infrastructure investment emerged during the eighteenth century, rather than in earlier periods. One argument is that new institutional arrangements increased incentives for investment. An alternative view is that economic development provided the impetus for improvement and that other factors were secondary in importance. This article evaluates the effects of a particular institutional change by examining the contribution of turnpike trusts to greater road expenditure. Turnpike trusts were private organizations that financed road improvements by levying tolls. They were established by individual Acts of Parliament. The acts appointed local landowners and merchants to the body of trustees and gave them the authority to levy a maximum schedule of tolls and to issue mortgage debt secured upon the income from the tolls. Trustees were also given the authority to purchase ...
How much did transport change and contribute to aggregate growth in the pre-steam era? This paper... more How much did transport change and contribute to aggregate growth in the pre-steam era? This paper answers this question for England and Wales by estimating internal transport costs in 1680 and 1830. We build a multi-modal transport model of freight and passenger services between the most populous towns. The model allows transport by road, inland waterway, or coastal shipping and switching of transport modes within journeys. The lowest money cost and travel time for passenger and freight is identified using network analysis tools in GIS. The model estimates show substantial reductions in the level of transport costs and its variability across space. The model’s results also imply substantial productivity growth in transport, equalling close to 0.8% per year. Plausible assumptions imply a social savings of 10.5% of national income by 1830. 1 Data for this paper was created thanks to grants from the Leverhulme Trust (RPG2013-093) Transport and Urbanization c.1670-1911 and NSF (SES-1260...
One of the most difficult challenges facing governments is to design good regulations. A key task... more One of the most difficult challenges facing governments is to design good regulations. A key task for historical research is to understand what has worked best in the past and why. Britain had the world’s largest privately funded and regulated toll road network during its industrializing era from 1700 to 1830. Although there was potential for large profits, toll authorities generally earned a modest rate of return on investment. Using a new GIS data set, this paper demonstrates that inter-modal competition from the river and canal network and binding toll caps set by Parliament kept rates of return low. Other regulatory policies, like mandated non-profit forms, are shown to have less impact. The results provide insights into Britain’s regulatory policies and their impact on industrialization. JEL Codes: K23, N43, N73
Britain after the Glorious Revolution provides a revealing context to study the link between poli... more Britain after the Glorious Revolution provides a revealing context to study the link between politics and development. We study how political parties and rent-seeking affected the diffusion of developmental infrastructure projects. Focusing on river navigation companies, we provide evidence that the promotion, approval, and opposition to navigation projects depended on whether the Whigs or Tories were in the majority and whether a constituency was well represented by the majority party. Our broader conclusion is that the Whigs were more conducive to developmental projects than the Tories. We also conclude that majority party strength limited access to navigation companies in some constituencies in the short-run, but the long-run effect on infrastructural development was largely neutral because party turnover was high. 1 We would like to thank Thomas Wheeler, Amanda Compton, and Alina Shiotsu for providing valuable research assistance. We also thank Stergios Skepardis, John Wallis, S...
During the first industrial revolution the English economy underwent a spatial transformation to ... more During the first industrial revolution the English economy underwent a spatial transformation to go along with its structural transformation in employment. It became highly urbanized and, apart from London, its urban center shifted to the northwest. This paper examines the role of transport in causing this spatial transformation. Transport changed greatly with infrastructure improvements and technological and organizational innovations. We focus on those occurring before the era of railways and steam ships, when wagons, canals, and sail ships were dominant. We construct a measure of market access for 458 towns in 1680 and 1830 using a new multimodal transport model and then estimate the effects of lower trade costs through changes in market access. Our regression model controls for various town characteristics, including coal endowments. The results show that changes in market access had a large positive effect on changes in urban population. Through counterfactuals we estimate that...
One theory argues that state ownership of infrastructure is greater in poor countries because the... more One theory argues that state ownership of infrastructure is greater in poor countries because the social returns from investment exceed the private returns by a wider margin. Another theory argues that state ownership is greater when legal and political institutions provide weak enforcement of private property rights or weak limits on government excess. I test these theories using cross-country data on state and private ownership of new railroad miles between 1860 and 1912. The results from a panel analysis show that private ownership of new railroad miles increased when G.D.P. per capita increased. They also show that state ownership was greater in countries with civil law legal systems compared to common law legal systems. The findings suggest that state ownership of new railroads was symptomatic of insecure property rights in some cases, but the dominant consideration was the level of income and its implications for private returns. JEL Classifications: N40; N70; H11; K40; P51
Using a new data set on Indian railways, we study the effects of state ownership on total factor ... more Using a new data set on Indian railways, we study the effects of state ownership on total factor productivity. Despite the move to greater state ownership, Indian railways experienced rapid TFP growth of 1.7 percent per year from 1874 to 1912. Moreover, we find no evidence of a decline in TFP relative to trend following state takeovers of private companies. Our estimation relies on a key feature of the institutional background whereby the former private railway companies were taken over by the Government of India at predetermined dates set by contracts negotiated in the 1850s and 1860s. We compare the same railway system before and after it changed ownership to identify the effects on productivity. The neural effect of state ownership cannot be explained by the guarantee system where private companies received a 5 percent dividend guarantee. Instead we find that the Government of India undertook actions similar to private companies. Our findings have broad implications for understan...
1 Many states nationalized portions of their railroad network between 1860 and 1912. This paper u... more 1 Many states nationalized portions of their railroad network between 1860 and 1912. This paper uses new cross-country data to examine which factors contributed to nationalizations and how nationalizations influenced network expansion. I find evidence that nationalizations were greater in countries with low constraints on the executive branch, with French and German civil law systems, and where neighboring countries had higher military capability. I also find evidence that nationalizations reduced mileage growth. The results suggest that external military threats increased the appeal of nationalizations, while legal and political institutions influenced their costs. They also suggest that nationalizations reduced investment incentives.
How does the development of one transport mode influence the development of another? This paper u... more How does the development of one transport mode influence the development of another? This paper uses time-series data to test whether inter-model network externalities influenced the development of road, canal, and port infrastructure in England from 1760 to 1830. The main finding is that road development had a positive effect on canal development. The results suggest that the option value of investing in a canal in the future diminished when nearby road improvements were initiated because there was less uncertainty about future profits from canal tolls. They also suggest a reinterpretation of road transport in the Industrial Revolution and point to the general importance of inter-modal network externalities.
The Glorious Revolution has been linked with Britain‘s economic development in the eighteenth cen... more The Glorious Revolution has been linked with Britain‘s economic development in the eighteenth century. This paper examines its impact on early transport improvements. First, it shows that several road and river undertakers in the 1600s had their rights violated because of political changes and actions taken by the Crown or Parliament. Second, it shows that the likelihood of rights violations was lower after 1689. Third, it uses structural breaks tests to demonstrate that the level of road and river investment was substantially higher after the mid-1690s. Together the evidence suggests that the institutional changes following the Glorious Revolution reduced political risk and uncertainty for infrastructure undertakers and that they responded by proposing and financing more projects.
We thank Hans-Joachim Voth, Albretch Ritchsel, and participants in the EREH Fast-track conference... more We thank Hans-Joachim Voth, Albretch Ritchsel, and participants in the EREH Fast-track conference in Paris for advice, encouragement, and comments. We also thank two anonymous referees who provided excellent comments in an extremely timely-manner. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
A new database containing all acts passed between 1600 and 1815 demonstrates that during the cent... more A new database containing all acts passed between 1600 and 1815 demonstrates that during the century preceding the Industrial Revolution, Parliament passed increasing numbers of acts altering property rights and encouraging the provision of public goods. The acts enabled individuals to sell, mortgage, lease, and improve land previously bound by legal legacies; granted rights to organizations, such as turnpikes and canal companies, which supplied infrastructure and public services; and replaced traditional agricultural rights with enclosed fields and individual property. The depth and detail of the database enables us to document these trends and discuss their effects on English economic development.
This Draft June 2012 The Glorious Revolution of 1689 is one of the most hotly debated political t... more This Draft June 2012 The Glorious Revolution of 1689 is one of the most hotly debated political transitions in history. Recent analysis of the Glorious Revolution centers on the role of the Whig party and the significance of party politics. We study how these factors affected market access in the infrastructure sector and identify whether Britain was still a limited access order in the decades after the Glorious Revolution. Using an extensive new data set we show the identity of the party in power and the local density of ruling party representation affected whether constituencies got acts of Parliament authorizing the improvement of infrastructure. A key reason is that ruling parties protected vested interests or limited entry to their supporters. Our main conclusion is that Britain was still a limited access order. The results have implications for Britain's economic development and for the study of access to organizations more generally.
Railways were integral to the development of the Indian economy before World War I. In this paper... more Railways were integral to the development of the Indian economy before World War I. In this paper, we present new estimates of total factor productivity (TFP) for railways from 1874 to 1912, which highlight the strong performance of this key industrial sector. We find railway-industry TFP growth to be substantial, averaging 2.6 percent per year and generating a 3 percent social savings for the Indian economy. A combination of factors contributed to TFP growth including greater capacity utilization, technological change, and improvements in organization and governance. The larger conclusion is that railways had higher TFP growth than most sectors in India and compared favorably with TFP growth for railways in other countries.
The performance of Indian railways in the nineteenth century provides a great context to study th... more The performance of Indian railways in the nineteenth century provides a great context to study the effects of state ownership on productivity and other aspects of operations. We rely on a key feature of the institutional background whereby the Government of India purchased a majority ownership stake in private railways at predetermined dates set by contracts negotiated decades before the companies came under state ownership. Controlling for individual railway fixed effects, year fixed effects, and railway-specific time trends, we find no evidence of a decline in TFP following state takeovers of private companies. Instead of reducing productivity, as the recent experiences with privatization would suggest, we find that the Government of India maintained productivity when it became the owner of railways. Government ownership influenced certain areas of operations such as the capital-labor ratio, but not others such as fares. This suggests the state was able to achieve similar producti...
There is a growing consensus that institutions are linked with economic development, but identify... more There is a growing consensus that institutions are linked with economic development, but identifying the effects of institutional changes has proven to be difficult. This book offers new insights by studying the role of political and legal changes in fostering investment during the early transportation revolution in England. First, it argues that the political settlement between Crown and Parliament made improvement rights more secure and increased incentives for investment. Conflict between political parties had little effect however. Second, it argues that greater competition for seats in the Commons contributed to investment by lowering the cost of obtaining transportation improvement rights. The effects of electoral competition changed, however, depending on whether MPs belonged to the majority party. Third, the book argues that the empowerment of juries in eminent domain proceedings had mixed effects. Juries lowered incentives by granting compensation well above the market valu...
tween transportation improvements and the English Industrial Revolution. One of the central quest... more tween transportation improvements and the English Industrial Revolution. One of the central questions is why greater infrastructure investment emerged during the eighteenth century, rather than in earlier periods. One argument is that new institutional arrangements increased incentives for investment. An alternative view is that economic development provided the impetus for improvement and that other factors were secondary in importance. This article evaluates the effects of a particular institutional change by examining the contribution of turnpike trusts to greater road expenditure. Turnpike trusts were private organizations that financed road improvements by levying tolls. They were established by individual Acts of Parliament. The acts appointed local landowners and merchants to the body of trustees and gave them the authority to levy a maximum schedule of tolls and to issue mortgage debt secured upon the income from the tolls. Trustees were also given the authority to purchase ...
How much did transport change and contribute to aggregate growth in the pre-steam era? This paper... more How much did transport change and contribute to aggregate growth in the pre-steam era? This paper answers this question for England and Wales by estimating internal transport costs in 1680 and 1830. We build a multi-modal transport model of freight and passenger services between the most populous towns. The model allows transport by road, inland waterway, or coastal shipping and switching of transport modes within journeys. The lowest money cost and travel time for passenger and freight is identified using network analysis tools in GIS. The model estimates show substantial reductions in the level of transport costs and its variability across space. The model’s results also imply substantial productivity growth in transport, equalling close to 0.8% per year. Plausible assumptions imply a social savings of 10.5% of national income by 1830. 1 Data for this paper was created thanks to grants from the Leverhulme Trust (RPG2013-093) Transport and Urbanization c.1670-1911 and NSF (SES-1260...
One of the most difficult challenges facing governments is to design good regulations. A key task... more One of the most difficult challenges facing governments is to design good regulations. A key task for historical research is to understand what has worked best in the past and why. Britain had the world’s largest privately funded and regulated toll road network during its industrializing era from 1700 to 1830. Although there was potential for large profits, toll authorities generally earned a modest rate of return on investment. Using a new GIS data set, this paper demonstrates that inter-modal competition from the river and canal network and binding toll caps set by Parliament kept rates of return low. Other regulatory policies, like mandated non-profit forms, are shown to have less impact. The results provide insights into Britain’s regulatory policies and their impact on industrialization. JEL Codes: K23, N43, N73
Britain after the Glorious Revolution provides a revealing context to study the link between poli... more Britain after the Glorious Revolution provides a revealing context to study the link between politics and development. We study how political parties and rent-seeking affected the diffusion of developmental infrastructure projects. Focusing on river navigation companies, we provide evidence that the promotion, approval, and opposition to navigation projects depended on whether the Whigs or Tories were in the majority and whether a constituency was well represented by the majority party. Our broader conclusion is that the Whigs were more conducive to developmental projects than the Tories. We also conclude that majority party strength limited access to navigation companies in some constituencies in the short-run, but the long-run effect on infrastructural development was largely neutral because party turnover was high. 1 We would like to thank Thomas Wheeler, Amanda Compton, and Alina Shiotsu for providing valuable research assistance. We also thank Stergios Skepardis, John Wallis, S...
During the first industrial revolution the English economy underwent a spatial transformation to ... more During the first industrial revolution the English economy underwent a spatial transformation to go along with its structural transformation in employment. It became highly urbanized and, apart from London, its urban center shifted to the northwest. This paper examines the role of transport in causing this spatial transformation. Transport changed greatly with infrastructure improvements and technological and organizational innovations. We focus on those occurring before the era of railways and steam ships, when wagons, canals, and sail ships were dominant. We construct a measure of market access for 458 towns in 1680 and 1830 using a new multimodal transport model and then estimate the effects of lower trade costs through changes in market access. Our regression model controls for various town characteristics, including coal endowments. The results show that changes in market access had a large positive effect on changes in urban population. Through counterfactuals we estimate that...
One theory argues that state ownership of infrastructure is greater in poor countries because the... more One theory argues that state ownership of infrastructure is greater in poor countries because the social returns from investment exceed the private returns by a wider margin. Another theory argues that state ownership is greater when legal and political institutions provide weak enforcement of private property rights or weak limits on government excess. I test these theories using cross-country data on state and private ownership of new railroad miles between 1860 and 1912. The results from a panel analysis show that private ownership of new railroad miles increased when G.D.P. per capita increased. They also show that state ownership was greater in countries with civil law legal systems compared to common law legal systems. The findings suggest that state ownership of new railroads was symptomatic of insecure property rights in some cases, but the dominant consideration was the level of income and its implications for private returns. JEL Classifications: N40; N70; H11; K40; P51
Using a new data set on Indian railways, we study the effects of state ownership on total factor ... more Using a new data set on Indian railways, we study the effects of state ownership on total factor productivity. Despite the move to greater state ownership, Indian railways experienced rapid TFP growth of 1.7 percent per year from 1874 to 1912. Moreover, we find no evidence of a decline in TFP relative to trend following state takeovers of private companies. Our estimation relies on a key feature of the institutional background whereby the former private railway companies were taken over by the Government of India at predetermined dates set by contracts negotiated in the 1850s and 1860s. We compare the same railway system before and after it changed ownership to identify the effects on productivity. The neural effect of state ownership cannot be explained by the guarantee system where private companies received a 5 percent dividend guarantee. Instead we find that the Government of India undertook actions similar to private companies. Our findings have broad implications for understan...
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