Unit V: Growth Contribution of Railways in Latin America before 1914

Question 1

What was the main argument of the paper regarding the contribution of railways to economic growth before 1914?

Answer 1

Railways had a much higher growth contribution in Argentina, Brazil, and Mexico compared to core countries where the technology was developed.

Question 2

What percentage of income per capita growth did railways account for in Argentina and Mexico?

Answer 2

20-25%.

Question 3

How did Brazil’s railway growth contribution compare to Argentina and Mexico?

Answer 3

Brazil’s railway growth contribution was even higher, partly due to its economic stagnation.

Question 4

What role did railways play in Latin America’s economic growth during the first globalisation?

Answer 4

They were a major growth engine and essential for domestic market integration and connecting to the international economy.

Question 5

True or False: Railways in Uruguay had a significant growth contribution similar to that of Argentina and Mexico.

Answer 5

False.

Question 6

What factors contributed to the low growth contribution of railways in Uruguay?

Answer 6

Slow growth of its railway sector and the advantage of alternative water transport.

Question 7

What does the term ‘social savings’ refer to in the context of railways?

Answer 7

The measure of the benefit of a new technology by comparing its cost to the cost of existing alternatives.

Question 8

How was the growth contribution of railways estimated in the study?

Answer 8

By considering both the increase in railway capital stock per capita and total factor productivity (TFP) growth in the transport sector.

Question 9

What is Total Factor Productivity (TFP)?

Answer 9

A measure of productivity that includes productivity increases within the railway sector and those from the substitution of railways for less efficient transport.

Question 10

In absolute terms, how did the growth contribution of railways in Argentina, Brazil, and Mexico compare to that in Britain or Spain?

Answer 10

It was significantly higher.

Question 11

What was the impact of geography on the growth contribution of railways in Uruguay?

Answer 11

Geography provided natural transport advantages, making railways less indispensable.

Question 12

Fill in the blank: Railways contributed between _______ and _______ percentage points of growth per year in Argentina, Brazil, and Mexico.

Answer 12

0.3 and 0.7.

Question 13

What was the significance of railways for export-led growth during the first globalisation?

Answer 13

They were crucial for integrating domestic markets and facilitating exports.

Question 14

What does the research suggest about the diffusion of railway technology in different economies?

Answer 14

The benefits of railway technology were not uniform and could be greater in some peripheral economies than in core countries.

Question 15

What is capital deepening in the context of railways?

Answer 15

Investment in railway infrastructure contributed to the growth of capital stock per capita.

Question 16

What was the estimated social savings as a percentage of GDP in Argentina around 1910-1913?

Answer 16

20.6%.

Question 17

How did railways affect the price elasticity of demand?

Answer 17

They influenced the responsiveness of demand to price changes, affecting consumer surplus.

Question 18

Define supernormal profits in the context of the railway sector.

Answer 18

Excess profits in the railway sector that could affect the overall assessment of its economic contribution.

Question 19

What major finding does the paper challenge regarding railway benefits in Latin America?

Answer 19

It challenges the idea that railways universally provided higher benefits in Latin America than in industrialised core countries.

Question 20

What was a primary driver of economic growth in Latin America before 1914?

Answer 20

The expansion of exports of primary products during the first globalisation boom.

This period saw Latin America experiencing one of the fastest rates of economic growth globally.

Question 21

What method did the study use to assess the direct contribution of railways to economic growth in selected Latin American countries?

Answer 21

Growth accounting techniques.

This involved analyzing the growth of railway capital stock per capita and the total factor productivity (TFP) gains.

Question 22

What were the key findings regarding the growth contribution of railways in Uruguay?

Answer 22

Very low contribution compared to Argentina and Mexico, which had substantial benefits.

Railways accounted for 20-25% of income per capita growth in Argentina and Mexico.

Question 23

How did the growth contribution of railways in Brazil compare to that of Argentina and Mexico?

Answer 23

Brazil showed an even higher contribution, partly due to its overall economic stagnation.

This suggests a more significant impact in peripheral economies than in core countries.

Question 24

What does the concept of ‘social savings’ measure?

Answer 24

The difference between the cost of using a new technology (railways) and the cost of the next best alternative.

It highlights resource savings from the innovation.

Question 25

Why was the growth contribution of railways in Uruguay significantly lower?

Answer 25

Due to geography offering natural transport advantages and a smaller railway network. ## Footnote The country's economic structure and the proportion of short-distance journeys also contributed.

Question 26

What are the 'capital term' and 'TFP term' in measuring railway growth contributions?

Answer 26

The 'capital term' estimates the contribution from railway capital stock growth; the 'TFP term' estimates productivity gains from reduced transport costs. ## Footnote These terms are essential for understanding the overall economic impact of railways.

Question 27

How did railways facilitate the export of primary products in Latin America?

Answer 27

By integrating inland regions with ports for transporting bulky goods. ## Footnote Examples include agricultural exports in Argentina and the coffee boom in São Paulo, Brazil.

Question 28

What might be a limitation of focusing solely on TFP growth within the railway sector?

Answer 28

It might underestimate the overall TFP gains associated with railways in other sectors. ## Footnote This overlooks significant productivity gains in sectors benefiting from cheaper transport.

Question 29

How did the growth contribution of railways in Latin America compare to Britain and Spain?

Answer 29

Higher in absolute terms for Argentina, Brazil, and Mexico. ## Footnote This indicates a greater impact on economic growth in peripheral economies.

Question 30

What indirect contributions might railways have had on Latin American economies?

Answer 30

Facilitating new industries, fostering market integration, enabling labour mobility, promoting urbanisation. ## Footnote These impacts are harder to quantify but could amplify direct growth effects.

Question 31

What is growth accounting?

Answer 31

A method to decompose the sources of economic growth into contributions from capital, labor, and total factor productivity. ## Footnote This helps in understanding the economic impact of various factors.

Question 32

What is 'Total Factor Productivity' (TFP)?

Answer 32

A measure of the efficiency with which inputs are used to produce output. ## Footnote It captures technological progress and efficiency improvements.

Question 33

What defines 'Peripheral Economies'?

Answer 33

Countries whose economic development is influenced by more developed core countries, often specializing in raw material production. ## Footnote This classification is important for understanding global economic dynamics.

Question 34

What are 'Supernormal Profits'?

Answer 34

Profits exceeding the minimum necessary to keep resources employed in their current use. ## Footnote Often associated with market power or temporary advantages.

Question 35

Fill in the blank: The period of increasing international economic integration from the mid-19th century to 1914 is known as the _______.

Answer 35

First Globalisation.

Question 36

True or False: The study concluded that railways had a negligible impact on economic growth in Latin America.

Answer 36

False. ## Footnote Railways were pivotal in boosting economic growth in several Latin American countries.

Question 37

What is 'Capital Deepening'?

Answer 37

An increase in the amount of capital equipment per worker, leading to higher productivity. ## Footnote This concept is crucial for understanding economic growth dynamics.

Question 38

What does 'Export-Led Growth' refer to?

Answer 38

An economic growth strategy relying heavily on expanding exports. ## Footnote This approach has been significant in the development of many economies.

Question 39

What is a 'Counterfactual' in economic analysis?

Answer 39

A hypothetical scenario representing what would have happened in the absence of a particular event or development. ## Footnote Used for comparison in economic studies.