Railroads and Regional Economies in Uruguay, c. 1910

04 Sep 2018

In the decades prior to the First World War Uruguayan incomes, fuelled by rising international prices for beef and wool, achieved levels similar to France’s and Germany’s, and vastly superior to those of Mediterranean Europe and all of the Southern Hemisphere, except the other three major ‘settler economies’ of Australia, Argentina, and New Zealand. These gains, however, were not evenly distributed within Uruguay. Railway transportation and domestic market integration reinforced narrow specialisation patterns and regional inequalities which persist to this day, with the southern coast of the country being significantly better-off than the north and north-east. This paper traces the origins of these patterns back to the era of export-led growth under the First Globalization. Evidence is reconstructed from freight traffic from the 152 train stations in the country to identify spatial clustering of economic activities, moving the unit of analysis away from the 19 provinces (departamentos) which make up Uruguay’s administrative divisions. This allows for a far more detailed benchmark of Uruguayan regional economies than previously available. Relying on geostatistical analysis and theoretical insights from the New Economic Geography, I propose a possible economic regionalization of Uruguay circa 1910.