Railway’s Effects on Economic Development: A Quantitative Study on Modern Henan (1890s-1930s)

5月 22, 2017

Gao Shuang

Zhengzhou Shengda University of Economics, Business & Management , Zhengzhou, China

Abstract: Different arguments on the relationship between railway construction and

economic development exist in literature. As the railway construction of Henan in the period

of late Qing Dynasty (1644-1911) and early Republic of China (1912-1949) provides a nearly

natural experiment to throw new light on this topic, this paper creates county-level panel data

for this period and conducts a further test with a difference-in-difference strategy. While the

effect of railway is demonstrated to be positive in some literature yet negative in others, this

paper identiﬁes some major intergroup differences: railway lines put into service after the

1910s and connecting central cities promoted population growth in regions along the railway

lines, enhanced their capacity to cope with external market shocks, yet they did not improve

integration with the intra-provincial market. By contrast, the railway lines put into operation

in the 1930s and connecting hinterland areas not only improved regional market integration

but contributed to higher living standards as well. The implication is that the effects of

railway are subject to the economic relations of various localities along the railway lines

and the economic attributes of various sectors. thus railways cannot be generally deﬁned to

be positive or negative. This conclusion helps explain the disagreements in empirical studies

and highlight the impact of railways on the regional economic structure.

Keywords: late Qing Dynasty and early Republican Period, railway, population density,

market integration, welfare level

JEL Classiﬁcation Codes: N75, P23, O18, R11