PhD Seminar (Econ)
Date & time
This paper examines the long-run economic impacts of a historically salient place-based policy in Java. Colonial Java was one of the world’s triumphs for sugar production once the Dutch forced cultivation system came into effect in the early nineteenth century. The Dutch then built exhaustive railroad networks across the island to particularly boost surplus extraction from sugar commodity. We make progress by exploiting the Dutch quasi-random experiment stemming from the haphazard formation of cultivation system sugar factories to circumvent the potentially endogenous placement of railroads. Utilizing our new assembled dataset, we document that railroad locations remain to thrive today: they are more urbanized, more engaged in entrepreneurship and innovation, and wealthier although railroads already demised. The enduring effects are consistent with the pattern of path dependence owing to the durability of colonial sunk-investments which automatically coordinates the allocation of present-day infrastructure investments, and human capital accumulation.