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Technological Creativity and Cheap Labour? Explaining the Growing International Competitiveness of German Mechanical Engineering before World War I

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  • Labuske Kirsten

    (University of Tuebingen, Geschwister-Scholl-Platz, Tübingen, Germany)

  • Streb Jochen

    (University of Hohenheim, Schloß Hohenheim 1, Stuttgart, Germany)

Abstract

Which factors caused the growing international competitiveness of German mechanical engineering industry in the pre-World War I period? In this paper, we want to address this question and elucidate whether or not the international market success of machine builders in the German Empire was determined by technological creativity and the availability of a comparatively cheap labour force. Based on an unbalanced panel, we therefore investigate the influence of demand, labour costs and technological creativity on export performance of 32 different machinery types. We find robust evidence that the development of export- import ratios in mechanical engineering was positively influenced by the growth of patent stocks that represent the new knowledge being available for German machine builders. In addition, we present some evidence for the assumption that the growing international competitiveness of German mechanical engineering was also caused by decreasing relative unit labour cost.

Suggested Citation

  • Labuske Kirsten & Streb Jochen, 2008. "Technological Creativity and Cheap Labour? Explaining the Growing International Competitiveness of German Mechanical Engineering before World War I," German Economic Review, De Gruyter, vol. 9(1), pages 65-86, February.
    • Handle: RePEc:bpj:germec:v:9:y:2008:i:1:p:65-86
    DOI: 10.1111/j.1468-0475.2008.00422.x
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    Cited by:

    1. Francesco Cinnirella & Jochen Streb, 2013. "The Role of Human Capital and Innovation in Prussian Economic Development," CESifo Working Paper Series 4391, CESifo.

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