Transport costs and economic growth in a backward economy: The case of peru, 1820-1920

This paper analyses the system of transportation and discusses the effect of geography and transport infrastructure on transport costs and economic growth in Peru during the 19th and early 20th centuries. Using primary and secondary sources, I find that geography imposed difficult transport challenges on Peruvians during this period. There were no navigable rivers in coastal and highland regions, railroads were scarce and most roads were inadequate for wagons, sometimes even for horses and mules. As a result, transport costs were extremely high, which constituted a barrier to trade, reduced gains from specialisation and retarded economic growth. Therefore, high transport costs seem to be one important factor in explaining the low income levels of Peru in the early 20th century in spite of the country's large endowments of natural resources. © Instituto Figuerola, Universidad Carlos III de Madrid, 2011.