Locomotives of local growth

Overview of the Impact of Railroads on Urban Growth in Sweden

Authors: Thor Berger, Kerstin EnfloInstitution: Department of Economic History, Lund UniversityPublication Details: Journal of Urban Economics, September 2015

Main Focus

This study analyzes both the short-term and long-term effects of railroads on urban growth across Sweden over a substantial period of 150 years, highlighting the transformative role of rail infrastructure in urban development.

Key Findings

Short-term Growth

Towns that gained access to railroads during the initial construction phases experienced a substantial increase in population. However, it is crucial to note that this growth primarily represented a reorganization of existing economic activity—from rural to urban settings—rather than a true increase in net population. This suggests that railroads facilitated the movement of individuals seeking better economic opportunities rather than attracting entirely new inhabitants.

Long-term Growth

There were significant and persistent differences in population sizes between towns that were connected to railroads and those that were not. This divergence continued into the 20th century, indicating that early access to railroads created a lasting phenomenon of path dependence in urban development. The research illustrates how initial advantages can lead to sustained population and economic growth over time.

Railroad Expansion and Urban Development

Historical Context

The railway network in Sweden developed primarily between 1855 and 1870 and was predominantly state-financed. This initiative aimed to enhance connectivity among major cities, particularly Stockholm, contributing to regional economic integration and mobility.

Initial Impact

Towns connected to the new railroad network observed a marked increase in population. This impact was quantitatively demonstrated through sophisticated statistical methods, including difference-in-differences and instrumental variable estimates, which indicate that the growth was fundamentally due to the relocation of economic activities from less connected areas to those with rail access. This transformation often resulted in the emergence of industrial clusters around rail hubs.

Methodology

Empirical Analysis

The study employed a comprehensive empirical analysis utilizing difference-in-differences estimates and instrumental variable strategies to rigorously assess the impacts of the railroad network on urban growth.

Population Data

The analysis utilized extensive longitudinal data that tracks demographic changes from the 1800s to the present, focusing specifically on towns that held charters in 1840, thereby providing a historical backdrop against which the impacts of railroads could be measured.

Temporal Scope

The research spans data from 1800 to 2010, allowing for a thorough examination of decadal population changes and their correlation with the expansion of the rail network.

Structural Changes and Path Dependence

Convergence vs. Divergence

Despite the expansion of the rail network in subsequent decades, towns that initially benefitted from early railroad connections maintained a competitive growth advantage. This led to a clear divergence in population and economic metrics compared to towns that did not receive early connections, reinforcing the significance of historical infrastructure in shaping urban hierarchies.

Evidence of Path Dependence

The study highlights that historical investments correlated with early railroad connections continue to produce enduring geographical and economic disparities, influencing contemporary urban dynamics and economic conditions.

Historical Background of Railroads in Sweden

Economic Transition

Sweden underwent monumental economic changes during the transition from an agrarian society to one based on industrialization, greatly facilitated by the advent of railroads. The rail network enabled faster and more reliable transportation of goods and people, effectively supporting the industrial economy's growth.

Transport Costs

Prior to the introduction of railroads, transport was both inefficient and seasonal, subject to limitations of existing road networks. The inception of railways drastically reduced transportation costs and improved reliability, fundamentally altering trade patterns and urbanization processes across Sweden.

Construction of Railroads

Political Debate

The rollout of Sweden's rail network was not without contention; it faced significant political challenges shaped by debates over market-based versus state-controlled approaches to railway construction.

Key Proposals

One notable proposal was Count Adolf von Rosen’s private initiative in 1845, which ultimately failed due to funding issues. This setback led to the more successful state-run initiative proposed by Nils Ericson in 1856, which laid the groundwork for the national railway framework we see today, despite encountering initial resistance from various stakeholders.

Empirical Strategies Used to Assess Impact

Difference-in-Differences Estimation

This approach involved assessing population changes in towns that newly gained rail access in comparison to those that did not experience such changes, providing robust evidence of the railroads' significant impact on urban growth.

Instrumental Variable Strategy

The research identified causal effects by utilizing historical network proposals and analyzing towns situated along low-cost approximate routes that had already been conceived prior to railway construction.

Falsification Tests

Conducted to assure that the study’s results were not influenced by any pre-existing trends in economic growth prior to the establishment of railroad systems, ensuring the integrity of the findings.

Evidence of Long-Term Impact and Current Relevance

Longitudinal Stability

The significant differences in population between towns that were early-connected to the railroad and those that remained disconnected persisted over time, underscoring the lasting legacy of historic rail connections on modern urban hierarchies and dynamics.

Contemporary Comparisons

Modern data illustrates that there is little disparity in key contemporary factors, such as present-day rail connections and urban infrastructure, between towns with varying historical access to railroads, which suggests that the past continues to influence current urban landscapes.

Conclusion

Implications for Policy

The study emphasizes the importance of considering historical infrastructure investments when evaluating policies aimed at urban economic development today. It reveals that temporary transformative shocks, such as the introduction of a rail network, can instigate lasting shifts in economic geography and urban dynamics that shape development patterns for generations.

Future Research Directions

Further research could focus on how contemporary investments in transportation infrastructure may influence urban growth in less developed regions, drawing parallels with historical case studies in order to inform better policy decisions in current and future urban development initiatives