Early Development of Italian Railways and Industrial Growth : A Regional Analysis

The paper provides an empirical assessment of the relation between the early diffusion of railways and industrial growth in Italy's regions. On the one hand, history represents one of the main factors conditioning transport systems, and the analysis of the early evolution of railways might thus provide a better understanding of present infrastructures. On the other hand, Italy is characterized by considerable territorial heterogeneity, calling naturally for a regional disaggregated analysis. The analysis is based on a unique historical dataset with annual 1861–1913 data on regional railway endowment and manufacturing value added at 1911 prices. The empirical strategy is based on the Mean Group type estimators borrowed from the panel time series literature. Our results suggest that, when evaluated at the national level, the contribution of early railway developments on industrial growth was relatively modest, albeit increasing over time. The effect was instead sizeable, both in terms of direct and spillover effects, for northern regions