How the World Became Rich. Mark Koyama

How the World Became Rich - Mark Koyama


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of safe sea-lanes was also critical in lowering transport costs, which enabled inter-regional trade and specialization. Archaeological evidence attests to the fact that manufactured goods such as amphorae (pottery) were mass produced and transported over long distances.

      Figure 2.6 The Roman road network

      Map provided by Erik Hornung from Flückiger, Hornung, Larch, Ludwig, and Mees (forthcoming). Grey lines symbolize roads, solid black lines navigable river sections, and dashed lines coastal shipping routes.

      In the case of Rome, the process of Smithian growth was aided by the benign climatic and geopolitical conditions discussed above. Investment in transport infrastructure, nonetheless, played a critical proximate role in Roman economic growth. Studying the distribution of terra sigillata, a red-gloss tableware made out of clay, Flückiger, Hornung, Larch, Ludwig, and Mees (forthcoming) find evidence that the intensity of Roman trade in this product reflected transportation costs. Places with lower transportation costs due to Roman infrastructure had greater inter-regional specialization, while better-connected areas traded more. As the Roman Empire declined, the road network remained in place. Until the 18th century, there was little new transport infrastructure. Flückiger et al. find that the effects of the Roman transportation network outlived the Roman Empire and were associated with much greater trade intensity up to the invention of the steam engine.

      Transport infrastructure also mattered for Chinese economic development. Economic growth in the Middle Kingdom was greatly aided by the creation of the Grand Canal by the Sui (581–618 CE) and Tang (618–907 CE) dynasties and improved by their successors. The Grand Canal, said to be 40 meters wide, connected the Yangzi to the Yellow River. Its construction needed thousands of laborers and the vast expenditures involved caused the collapse of the Sui. The canal transported grain to the capital city, Luoyang, and played a critical role in supplying the army guarding the northern frontier. In the Tang dynasty, 130,000 tons of grain were transported north each year (Ball, 2017, p. 120).

      Though the primary purposes of the Grand Canal were political and military, its creation brought economic benefits. According to Scheidel (2019, p. 263), between the Yangzi and Yellow Rivers, “the Grand Canal and multiple smaller rivers and feeder canals created … a huge fertile crescent united by cheap and safe transport…. No inland waterway system in world history approaches this one as a device for integrating large and productive spaces.” As we discuss in Chapter 3, market integration in China was comparable to that in many parts of Europe until the latter part of the 18th century. One reason for this was the massive investments made by several dynasties in the Grand Canal.

      A final example of the importance of transport infrastructure comes from industrializing Britain. Before 1700, Britain (like other pre-industrial economies) was afflicted by extremely high transport costs. By 1870, this situation had been transformed. As Dan Bogart and his collaborators document (Bogart, 2014; Bogart, Alvarez-Palau, Dunn, Satchell, and Taylor, 2017; Bogart, Satchell, Alvarez-Palau, You, and Taylor, 2017), this transformation was partly due to steam power and the introduction of the railways. It was also due to investment in the road and canal network beginning in the 18th century.

      Another major area of improvement in industrializing Britain was the canal network. Waterborne transport was much more cost-efficient than road transport. Canals played an important role in linking together Britain’s growing industrial heartland in the northwest with coal.

The increase in turnpikes in England and Wales: 1680–1830

      Figure 2.7 The increase in turnpikes in England and Wales: 1680–1830

      Map provided by Dan Bogart from Bogart, Satchell, Alvarez-Palau, You, and Taylor (2017). Lines represent turnpike roads in 1680 (panel a) and 1830 (panel b).

      One of the challenges in measuring the benefits of infrastructure investment is that beyond the direct effects of lowering transport costs, there are numerous (potentially important) but difficult to measure indirect effects. We can think about these improvements through the concept of market access, which summarizes all the ways both goods and factor markets – that is, markets for labor, land, and capital – change in response to a change in transport technology or infrastructure.

Changes in US market access, 1870–90

      Figure 2.8 Changes in US market access, 1870–90

      Data source: Donaldson and Hornbeck (2016).


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