Here is Paul Krugman's take on this most interesting article in the NYT on the increase in train freight from China to Europe, along the Silk Road. Economic geography & Industrial Organization put together!
The New Railway Age
I’m surprised that the econoblogosphere hasn’t taken much notice yet of Keith Bradsher’s interesting piece on the revival of the Silk Road — now not consisting of camels carrying Chinese silk, but of huge freight trains carrying Chinese electronics.
But really, if you’re interested in globalization, this should be of great interest. Transportation technology matters, a lot; container shipping revolutionized the world.
And the revival of trains is an interesting story. In the United States, freight rail bottomed out in the 1970s, and has since been carrying a rising share of ton-miles — around 40 percent these days. Now it’s starting to play a role in long-distance international trade.
It comes down, of course, to time and money. Air freight is expensive, especially in what is looking — despite fracking — like an era of sustained high fuel costs. So, to a lesser extent, is trucking, which in any case isn’t a realistic option for long-range international trade. Shipping is cheap but slow. So there’s an important niche for rail — a niche that probably hasn’t been fully exploited, because people forgot for a while about a technology that seemed old-fashioned.
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