Railroads, Technology Adoption, and Modern Economic Development: Evidence from Japan

Abstract

Railroad access may accelerate technological progress in the industrial sector and induce modern economic development. By digitizing novel datasets of factories and railroad networks in late 19th- and early 20th-century Japan and using the least-cost path between prioritized destinations as an instrument, I find that the distance from railroads in 1892 accounts for 39 percent of the growth in steam power adopted by factories from 1888 to 1902. I also find that being closer to railroads induces urbanization. The results support the view that railroad network construction was crucial to modern economic development in pre-First World War Japan.

Keywords: Railroads, Technology Adoption, Modern Economic Development

JEL Classification: N65, N75, O14, O18, O33