Public Infrastructure and Economic Development: Evidence from Postal Systems

Although postal systems have been central to statebuilding efforts around the globe, their contributions to development are largely unclear. We argue that the post office affected economic development in both the short and long terms. To test our argument, we combine original data on the cross-national distribution of postal systems from 1875 to 2007 with granular county-level data in the United States from 1850 to 2000. In both country- and county-level analyses, we show that the spread of postal systems affected economic outcomes in the short and long terms. The results are robust across dependent variables, model specifications, and estimation strategies. We provide additional evidence that suggests these effects were generated by reducing transaction costs and strengthening social capital. Our findings highlight the role of public infrastructure in promoting economic growth, documenting a channel through which state institutions precede growth, and suggest that statebuilding efforts have longstanding effects on relevant communities.