Germany overtook Britain in comparative productivity levels for the whole economy primarily as a result of trends in services rather than trends in industry. Britain’s productivity lead in services before World War II reflected external economies of scale in a highly urbanised economy with an international orientation. Low productivity in Germany reflected the under-development of services in an economy that was slow to move out of agriculture. As German agricultural employment contracted sharply from the 1950s, catching-up occurred in services. This was aided by a sharp increase in human and physical capital accumulation, underpinned by the institutional framework of the postwar settlement.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
4597.
Find related papers by JEL classification: N10 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - General, International, or Comparative N30 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth - - - General, International, or Comparative O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
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