Kevin Bryan discusses the work of Dave Donaldson:
A canonical example of Donaldson’s method is his most famous paper, written back when he was a graduate student: “The Railroads of the Raj”. The World Bank today spends more on infrastructure than on health, education, and social services combined. Understanding the link between infrastructure and economic outcomes is not easy, and indeed has been a problem that has been at the center of economic debates since Fogel’s famous accounting on the railroad. Further, it is not obvious either theoretically or empirically that infrastructure is good for a region. In the Indian context, no less a sage than the proponent of traditional village life Mahatma Gandhi felt the British railroads, rather than help village welfare, “promote[d] evil”, and we have many trade models where falling trade costs plus increasing returns to scale can decrease output and increase income volatility.
Donaldson looks at the setting of British India, where 67,000 kilometers of rail were built, largely for military purposes.