Was Germany Ever United? Evidence from Intra- and International Trade, 1885-1933

42 Pages Posted: 12 Jun 2008

See all articles by Nikolaus Wolf

Nikolaus Wolf

Centre for Economic Policy Research (CEPR); Humboldt University Berlin - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); London School of Economics - Centre for Economic Performance (CEP)

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Date Written: April 2008

Abstract

This paper asks whether Germany was ever an economically integrated area. I explore the geography of trade costs in a new data set of about 40,000 observations on regional trade flows within and across the borders of Germany over the period 1885-1933. There are three key results. First, the German Empire before 1914 was a poorly integrated economy, both relative to integration across the borders of the German state and internally. Second, this internal fragmentation had its origins in administrative borders within Germany, in a geographical barrier that divided Germany roughly along natural trade routes into east and west, and in a considerable cultural heterogeneity within Germany prior to 1919. Third, internal integration improved along with external disintegration in the wake of the war, partly due to border changes along the lines of ethno-linguistic heterogeneity and again with the Great Depression. By the end of the Weimar Republic in 1933, Germany was reasonably well integrated.

Keywords: aggregation bias, border effects, economic integration, Germany

JEL Classification: F15, N13, N14, N90

Suggested Citation

Wolf, Nikolaus and Wolf, Nikolaus, Was Germany Ever United? Evidence from Intra- and International Trade, 1885-1933 (April 2008). Available at SSRN: https://ssrn.com/abstract=1142178

Nikolaus Wolf (Contact Author)

Centre for Economic Policy Research (CEPR) ( email )

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Humboldt University Berlin - Department of Economics ( email )

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