Transportation Costs and the Social Savings of Railroads in Latin America. The Case of Peru

This article estimates the social savings of the railroads in Peru in the late 19th and early 20th centuries. The construction of railroads made it possible for Peruvians to substitute the traditional system of mules and llamas, although only for a few routes. Using primary and secondary sources, I estimate the social savings for 1890, 1904, 1914 and 1918. Social savings ranged between 0.4% and 1.4% of GDP in 1890, but then increased to a range between 3.7% and 9.5% of GDP in 1918. The social savings of railroads in Peru were comparable to those for the United States and Great Britain, but were much lower than those for Mexico, Brazil and Argentina. Keywords: Railroads, Transportation, Economic Development, Peru, Latin America JEL: N70, N76, R40