Mechanization, Transportation, and the Location of Industry in Germany 1846 to 1907

Abstract

This dissertation investigates the question: why do some regions industrialize and others do not? The research focuses on industrialization in Germany in the second half of the 19th century when the country adopted British steam technology and built a dense railroad network. The central thesis is that the adoption of steam powered machinery created incentives for manufacturers to concentrate production in central areas and around coal fields. The railroad boom lowered trade costs and thereby made it feasible to serve distant markets from these central locations. As a result, the Ruhr Area gained industrial employment in large numbers while regions in Bavaria and East Elbia lost their traditional manufacturing centers. Specifically, the first chapter finds that increases in the use of steam power led to a rise in the spatial concentration of manufacturing industries and higher co-location with coal mining. The second chapter compares the effects of access to coal and access to consumer markets on regional industrial employment to separately identify the impact of coal fields and the population centers that formed around them. The results show that access to coal was more important than access to consumer markets for the location of metal production and textiles. The third chapter shows that improvements in market access had a negative impact on manufacturing growth in regions with below median per capita manufacturing employment, but for regions above this mark the impact was positive. This means that the transportation improvements did not support the dispersion of industry but instead contributed to the geographic concentration of industrialization. Together the chapters show that the adoption of steam powered technology in manufacturing and transportation raised the spatial concentration of manufacturing and help to explain why industrial development was not more widespread in Germany.