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Transportation Infrastructure and Economic Growth in a Dissolving Country: (Ir)relevance of Railroads in the Ottoman Empire

Hanedar, Avni Önder (2013): Transportation Infrastructure and Economic Growth in a Dissolving Country: (Ir)relevance of Railroads in the Ottoman Empire.

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Abstract

The literature includes few studies and mixed findings on the impacts of the railroad construction for underdeveloped economies. Using the data on the population of judicial districts in the Ottoman Empire between 1893 and 1914, we examine the relationship between railroad access and economic growth in local economies of a transformation country on the eve of the First World War. Our empirical results show the size expansion in the affected areas of railroad access. This suggests positive impact of railroads on economic growth in the Ottoman Empire through higher employment opportunities and fertility rates. To deal with endogeneity problems, we use instrumental variable (IV) strategy. Our 2SLS results also indicate that the causality runs from access to railroads to population growth. The paper contributes to the previous literature by focusing on how transformation in road networks induced economic growth in an agricultural and dissolving economy.

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