The Fast-Track to Technological Change: Railways, Market Access and Industrialization in Belgium

The project will for the first time digitize spatially and sectorally disaggregated high-quality census information on labor and output market variables in the various Belgian population, industrial and agricultural censuses and detailed information contained in the historical (light) railway archives for the period 1846-1914. These data are subsequently used to better understand how Belgium’s forerunner role in ‘railwayfication’ has shaped and continues to shape its economic performance. The analysis of the data will combine the development of theoretically founded structural trade and economic geography models that integrate existing insights in the links between transport innovations, technology adoption and technological progress with reduced-form estimating equations that provide insights in main elasticities in the model and allow for a quantitative validation for the Belgian case. The central focus is to analyze the effect of increased market access on the intensive and extensive margins of technological development: (i) on the intensive margin, the extent to which market access and increased firm competition facilitated the adoption of cost-saving technologies for existing firms and (ii) on the extensive margin, the extent to which market access and increased effective demand allowed entrepreneurs to found firms active in new sectors which require large initial capital investments yet push up manufacturing productivity.