Donaldson, David
(2009)
Railroads, economic development and famine prevention: Theory and evidence from India, 1861-2000.
PhD thesis, London School of Economics and Political Science.
Abstract
The first chapter of this thesis draws on newly collected archival data from colonial India to estimate the impact of India's vast railroad network on real income there from 1870 to 1930. Guided by four predictions from a general equilibrium trade model I find that railroads: (1) reduced trade costs and interregional price gaps; (2) expanded interregional and international trade; (3), raised real income levels (but harmed neighbouring regions without railroad access); and (4), that a sufficient statistic for the impact of railroads on welfare in the model accounts for virtually all of the estimated reduced-form impact of railroads on real income. The second chapter examines the role that openness to trade, as brought about by railroads in colonial India, affected the extent to which real incomes in the agricultural sector were exposed to variation in rainfall (an input to agricultural production). This relationship is theoretically ambiguous, but I find strong empirical support for trade openness reducing the exposure of real income to rainfall (prices become less responsive and nominal incomes more responsive to local rainfall, but real incomes are on net less responsive). I find analogous effects on mortality rates, implying that the responsiveness of consumption to rainfall may have fallen as well. These results suggest that openness can reduce real income volatility, and that railroads did much to rid India of famine. The final chapter extends the above investigation of the role that weather fluctuations play in Indian citizen's lives into the modern period, from 1957-2000. A first set of results document large effects of excess temperature and surfeit rainfall on both adult and infant mortality - further, these effects are only present in the growing periods of the year and are entirely absent among urban citizens. A second set of results documents an analogous pattern of deleterious effects of adverse weather on agricultural yields, wages and prices.
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