The Yanks of Europe? Technological Change and Labor Productivity in German Manufacturing, 1909-1936


Joost Veenstra
Joost Veenstra
  • Speaker
Faculty of Economics & Business, University of Groningen

Event Information

Type
Research Seminar
Programme
Date
Mon. 23 Sep. 2013
Contact
Marten Boon
Time
12:00-13:30 hours
Location
Mandeville Building T03-42


Abstract

America’s lead over Europe from the late nineteenth century onwards has often been contributed to differences in initial conditions, trapping Europe in a labor-intensive and low productive technological path. However, in the case of German manufacturing, this analysis does not align with qualitative evidence obtained from the German metal-engineering industry, which shows that German manufacturers actively copied or imported American machinery. In this paper, we reassess the productivity dynamics in Germany on the basis of a new model by Basu and Weil that emphasizes the role of technology and which predicts convergence in light of rapid capital deepening. We construct a data set on the basis of two new German/American industry-of-origin benchmarks for 1909 and 1936. By means of a data envelopment analysis, we measure the effects of capital accumulation, technological change, and efficiency change and find evidence for considerable increased capital-intensity levels in the German manufacturing sector during this period. The process of capital deepening was accompanied by a large labor-productivity growth potential which, however, did not materialize as low levels of technical efficiency stood in the way of German convergence. These findings are in line with Basu and Weil’s model of localized technological change and discredit the traditional technological lock-in hypothesis.

The Business History Seminar is organised by the Business History Centre and has been made possible by financial support from the Erasmus Research Institute of Management (ERIM) and the Erasmus School of History, Culture and Communication.

Abe de Jong
Professor of Corporate Finance and Corporate Governance
  • Coordinator
Ben Wubs
Ben Wubs
Associate Professor at Erasmus School of History, Culture and Communication
  • Coordinator