Seminario CEDE - Pedro Américo
This article documents the impact of the Brazilian railway network on technology adoption between the middle nineteenth and twentieth century. I exploit variation induced by geographic location, where municipalities near the least-cost routes were more likely to be connected to the railway system, to identify the effects of railroads on mechanized cotton spinning capacity. I show that the expansion of railways increased the adoption of new technologies in the textile industry. The railroads, built to export coffee, connected the national industry to the modern overseas machinery market, increasing the import of new technologies. In the medium term, this technological catch-up resulted in the shift of workers from the agricultural sector to the industrial sector. Municipalities initially connected to the railroad have higher per capita income today, despite the closure of many railway stations. Overall, the results show the importance of domestic trade costs to partly explain the slow diffusion of new technologies and industrialization to the peripheral countries between the XIX and XX centuries.