Infrastructure and Economic Growth in Spain, 18451935

Between the mid-nineteenth century and the outbreak of the Spanish Civil War in 1936, Spain undertook a sustained process of economic growth and structural change, but was unable to converge with the core European economies. The reasons behind Spain’s failure to converge have been a subject of debate among historians for decades. This dissertation aims to analyze the role played by infrastructure in Spanish economic growth during that period, and tries to find out to what extent the potential shortage or inadequacy of the Spanish infrastructure endowment was one of the factors to blame for the country’s nonconvergence. The dissertation draws on recent research on the economic impact of infrastructure, and on the numerous attempts to measure that impact which have been undertaken in the wake of David Aschauer’s work on the United States. One of the conclusions of this literature is the idea that infrastructure has a substantial growth impact under certain circumstances, especially in the case of construction of large-scale networks based on new technologies. This situation could indeed be found in Spain during the late nineteenth century, when the railroad network was established, as railroads constituted a completely new, large-scale network with far-reaching consequences. Moreover, on the basis of social saving estimates, transport historians have insisted that the role of railroads was especially important in countries such as Spain and Mexico, which lacked alternative waterway systems. As a consequence, the elasticity of productivity growth to infrastructure increases might be expected to have been relatively high in Spain during the period under analysis, and the hypothesis might be suggested that Spanish economic growth would have been higher if there had been a higher infrastructure investment effort. There is, however, an objection to this interpretation, because the high level of the social saving estimates available for Spanish railroads, on which this hypothesis is partially based, has been fiercely criticized by some historians. Critics insist that the failure of the Spanish railroad companies as private businesses constitutes powerful evidence that Spanish railroads were constructed ahead of demand, without paying attention to real transport requirements. On the basis of this hypothesis, they conclude that the economic effects of Spanish railroads were actually lower than those suggested by the social saving figures available.