Mechanization and the spatial distribution of industries in the German Empire, 1875 to 1907

Authors


  • I would like to thank Price Fishback, Timothy Guinnane, Taylor Jaworski, and Jean-Laurent Rosenthal for helpful comments. I would also like to thank the organizers and participants of the European Social Science and History Conference in Glasgow, 2012; the Annual Meeting of the Southern Economics Association in Washington, DC, 2011; the Annual Conference of the Economic History Association in Boston, 2011; the Center for Competitive Advantage in the Global Economy summer school at the University of Warwick, 2011; and the economic history workshop at the University of Arizona. Any errors are of course my own.

Abstract

The adoption of water, steam, and electric power transformed manufacturing in the nineteenth century. This article studies the relationship between this technological change and the spatial distribution of manufacturing industries in the German Empire during the late nineteenth and early twentieth century. The adoption of steam powered machinery created incentives for manufacturers to form industry clusters near coal mining regions. Specifically, this article shows that a one standard deviation increase in the average size of steam power operations was associated with a rise in geographic concentration of one-quarter of a standard deviation. In contrast, a one standard deviation increase in the size of water power operations was associated with a drop in geographic concentration of one-sixth of a standard deviation. This is consistent with the constraint that water powered plants had to be located on a stream with a sufficient gradient and away from other water powered plants to avoid disruption from neighbouring gates and dams. Together the findings indicate that the transition from water to steam powered machinery contributed to the geographic concentration of manufacturing in the nineteenth century.

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