Railroads and rural industrialization: Evidence from a historical policy experiment

This paper studies the impact of railroads on growth and structural transformation in 19th-century Sweden. To establish causality, the analysis exploits that the main state-owned lines of the network traversed rural communities that were not directly targeted by planners. Areas “accidentally” traversed by one of these trunk lines experienced substantially more rapid population growth and structural transformation over the next 50 years. These findings suggest that investments in transportation networks can spur industrial development and that the railroad is an important factor to account for Sweden's rapid catch-up with the leading European industrializers.