Transport costs and economic growth in a backward economy: the case of Peru, 1820-1920

Abstract

This paper analyses the system of transportation and discusses the effect of geography and transport infrastructure on transport costs and economic growth in Peru during the 19 th and early 20 th centuries. Using primary and secondary sources, I find that geography imposed difficult transport challenges on Peruvians during this period. There were no navigable rivers in coastal and highland regions, railroads were scarce and most roads were inadequate for wagons, sometimes even for horses and mules. As a result, transport costs were extremely high, which constituted a barrier to trade, reduced gains from specialisation and retarded economic growth. Therefore, high transport costs seem to be one important factor in explaining the low income levels of Peru in the early 20 th century in spite of the country's large endowments of natural resources. 361 RESUMENEste artículo analiza el sistema de transporte y discute el efecto de la geografía y de la infraestructura de transporte en los costos de trasporte y el crecimiento econó mico en el Perú durante el siglo XIX y principios del siglo XX. Usando fuentes primarias y secundarias, mostramos que la geografía impuso dificultades severas a los peruanos durante este período. El Perú no tuvo ríos navegables en la costa y en la sierra, hubo pocos ferrocarriles, y la mayor parte de los caminos eran inadecuados para carretas, incluso para caballos y mulas. Como resultado, los costos de transporte fueron extremadamente altos, lo que representó una barrera al comercio, redujo las ganancias por especializació n y afectó el crecimiento econó mico. Por lo tanto, los altos costos de transporte parecen ser uno de los factores que explican los bajos niveles de ingreso de los peruanos a principios del siglo XX a pesar de sus grandes dotaciones de recursos naturales.

Railroads in Peru: How Important Were They?

“…Finally, Deustua (2009) analyzes the impact of railroads on the mining sector in the central highlands. Recently, Zegarra (2011) shows that railroads were less costly than the traditional system of mules and llamas, which had an important impact on the growth of copper, sugar and cotton sectors.…”

“…III, p. 10). 9 Zegarra (2011). markets, but even in this country, as wheat, coffee, cacao, and so on prove, which for the coastal consumer now come largely from abroad -even when interior growers can supply them in sufficient quantity, even superior quality" 10 . Later in 1860, Manuel Pardo indicated that the construction of railroads would reduce transportation costs dramatically, allowing the exploitation of natural resources, especially in the central highlands 11 .…”

“…Not surprisingly, in a recent study Zegarra (2011) shows that railroads promoted the growth of copper, sugar and cotton exports. the highlands.…”

“…Most remained in an archaic state, farming extensively, and with production increasing only slowly" 41 . More recently, Zegarra (2011) shows that the impact of railroads on the growth of exports was largely related to the presence of scale economies. Railroads had a significant impact on the growth of exports of copper, sugar and cotton.…”

Big push or big grab? Railways, government activism, and export growth inLatinAmerica, 1865–1913

“…On pre‐railway transport infrastructure in Spanish America, see Gutiérrez Álvarez, Las comunicaciones ; see also Summerhill, Order against progress , for Brazil; Clark, ‘Railway building’, for Ecuador; Coatsworth, Growth against development , for México; and Zegarra, ‘Transport costs and economic growth’ for Peru. In some cases, such as Mexico, the transport system experienced an involution between the end of the colonial period and the 1870s, with a decrease in wheeled traffic and an increase in the use of pack animals; see Riguzzi, ‘Los caminos del atraso’.…”