Infrastructure and Dutch economic development, a new long run data set for the Netherlands 1800-1913

In the nineteenth century, the Dutch economy underwent a transition from a stag¬nant mercantilist system to a dynamic system of production, based on indus¬try and modern services. The path this transformation took, and its exact timing are not yet fully understood. In this study, I investigated two probable deter¬¬minants of the process, namely capital formation, and infrastructure.
The central question had the following two elements: (1) “What was the annual value of capital formation and the capital stock in infrastructure in the Nether¬lands in the period 1800-1913”; and: (2) “Which were the macro¬economic consequences of this?”
In conclusion, it is argued that between 1866 and 1888 infrastructural capital formation created Rostowian ‘preconditions for take-off.’ Led by the central govern-ment, large investments took place in ‘heavy’ infrastructure. This created opportunities for further economic development. Econometric analysis provides strong evidence that these opportunities have indeed been taken. The existence of a strong causal link leading from infrastructural investment to the growth of GDP could be proven with a vector autoregression model based on the concept of Granger causality.
Yet, it would be a mistake to regard infrastructure as homogenous. The subdivision of infra¬structure displayed new perspectives. These included a further phase of growth, taking place after 1903, which was driven by domestic demand, and based on ‘light’ utilities. This conclusion is important not only for gaining insight into the dynamics of nineteenth century infrastructural capital for¬mation, but also for modern analysis of the possible role of infrastructure in the process of economic growth.