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Railroad Expansion and Industrialization: Evidence from Meiji Japan

Published online by Cambridge University Press:  29 August 2014

John P. Tang*
Lecturer, Research School of Economics, The Australian National University, LF Crisp Building 26, Acton ACT 0200Australia. E-mail:


Railroads in late nineteenth-century Japan are credited with facilitating factor mobility as well as access to human and financial capital, but their impact on firms has been unclear. Using a prefecture-level panel data set and a difference-in-differences model that exploits the temporal and spatial variation of railroad expansion, I investigate the relationship between railways and increased firm activity. Rail access led to higher average firm capitalization, particularly in manufacturing, and more populated and less accessible areas gained disproportionately more firms. By widening markets and allowing for agglomeration economies, Japanese railways promoted capital investment and more efficient resource allocation.

Copyright © The Economic History Association 2014 

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The author thanks Tim Hatton, Jeff Williamson, Ann Carlos, Tetsuji Okazaki; two anonymous referees; seminar participants at Universitat de Barcelona, University of Oxford, London School of Economics, University of New South Wales, University of California, Berkeley, National University of Singapore, and University of Sydney as well as participants at the Asian Historical Economics Conference and NBER Japan Project meeting for useful comments. This research is supported by grants provided by the ANU College of Business and Economics and the Australian Research Council (DE120101426).



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