INDISPENSABLE RAILROADS IN A BACKWARD ECONOMY - CASE OF MEXICO

This article assesses the impact of railroads in nineteenth-century Mexico. Social savings estimates are constructed to measure direct benefits: passenger savings were negligible, but freight savings and indirect benefits were large enough to account for more than half of the increase in the productivity of the economy prior to 1910. On the other hand, railroad savings went mainly to stimulate the export sector, backward linkages to Mexican industry failed to develop, foreign exchange costs were high, and the effects on land tenure, social structure, and institutions were negative. Railroads promoted both growth and underdevelopment. © 1979, The Economic History Association. All rights reserved.