We provide new theory and evidence on the relationship between economic development and international trade using Argentina’s late-19th-century integration into the global economy. We show that structural transformation, from agriculture to non-agriculture, and across disaggregated goods within the agricultural sector, was central to Argentina’s rapid export-led economic development. We provide evidence that the reductions in internal transport costs from the construction of the railroad network were important in enabling interior regions to participate in this process of structural transformation and economic development. We rationalize our empirical findings using a theoretical framework that emphasizes a spatial Balassa-Samuelson effect, in which regions with good access to world markets have higher population densities, urban population shares, relative prices of non-traded goods, and land prices relative to wages. In counterfactuals, we find that the construction of the railroad network increases the total population of Argentina by 49 percent under free international migration and raises the common real wage across all Argentinian districts by 8 percent under restricted international migration.