The Development of the German Macroeconomy

This chapter deals mainly with the remarkable upsurge of the German economy in the 19th century. The most often-mentioned characteristic of modern Germany in discussions of its economic development is the political fragmentation of the country; this appears extreme until well into the 19th century, at least compared with all but Italy in our sample of countries. At one time it was argued that the really strong economic acceleration in Germany came sometime after the formation of the Zollverein in 1834, but more recent data suggest that one can just as easily go back to the immediate post-Napoleonic period — or quite possibly earlier — to locate the source of modern growth. The difference, transparently, is crucial in the interpretation of what went on in Germany, since the earlier start might easily suggest that the oft-praised and certainly more visible mid-19th century bureaucratic control in Germany might have had less to do with the rapid economic progress that country experienced than is commonly supposed. This view is certainly a controversial one. It needs to be underscored, though, that the macro-details are not often directly relevant to this dispute and, in any case, there is obviously a lot to set down about the general macro-profile of modernizing Germany — and that is the main task of this study.