Early railways and industrial development: Local evidence from Sardinia in 1871-1911

During the second half of the 19th century, railroads developed worldwide and were regarded as carriers of modernity that could expand market potential and favor the transition from an agricultural economy toward an industrial one. Did railways actually have medium-run effects on the industrial sector? We bring new evidence by looking at the case of Sardinia. According to our estimates, those municipalities that received a railway station during the 19th century displayed higher industrial employment by 1911, specifically in sub-sectors such as foodstuff and metal processing. These effects stem primarily from locations having direct access to the primary railway lines with standard gauge rails. The present results are robust to a large set of control variables and district fixed effects, as well as to the use of an instrumental variable based on least-cost paths. Other sectors, such as minerals and construction, textiles, chemicals and extractive are not at the core of our analyses as, in 1911, they were present only in less than twenty percent of Sardinian municipalities.