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Economic nationalism and economic integration: the Austro‐Hungarian Empire in the late nineteenth century




This paper seeks to reconcile two seemingly contradictory strands in the literature on economic development in the late nineteenth century Habsburg Empire - one emphasizing the centrifugal impact of rising intra-empire of nationalism, the other stressing significant improvements in market integration across the empire. We argue that the process of market integration was systematically asymmetric, shaped by intensifying intra-empire nationality conflicts. While grain markets in Austria-Hungary became overall more integrated over time, they also became systematically biased: regions with a similar ethno-linguistic composition of their population came to display significantly smaller price gaps between each other than regions with different compositions. The emergence and persistence of this differential integration cannot be explained by changes in infrastructure and transport costs, simple geographical features or asymmetric integration with neighbouring regions abroad. Instead, differential integration along ethno-linguistic lines was driven by the formation of ethno-linguistic networks. Finally, the analysis shows that the emerging pre-war regional integration patterns – shaped by nationalist sentiment – effectively anticipated the post-war settlement: the fault lines along which the Habsburg Empire was to break up eventually are evident in the price data about a quarter of a century or so before the outbreak of the First World War.
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Suggested Citation

  • Max‐Stephan Schulze & Nikolaus Wolf, 2012. "Economic nationalism and economic integration: the Austro‐Hungarian Empire in the late nineteenth century," Economic History Review, Economic History Society, vol. 65(2), pages 652-673, May.
  • Handle: RePEc:bla:ehsrev:v:65:y:2012:i:2:p:652-673
    DOI: j.1468-0289.2010.00587.x

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    References listed on IDEAS

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    Cited by:

    1. Sascha O. Becker & Katrin Boeckh & Christa Hainz & Ludger Woessmann, 2016. "The Empire Is Dead, Long Live the Empire! Long‐Run Persistence of Trust and Corruption in the Bureaucracy," Economic Journal, Royal Economic Society, vol. 126(590), pages 40-74, February.
    2. Ciccarelli, Carlo & Missiaia, Anna, 2014. "Business fluctuations in Imperial Austria's regions, 1867-1913: new evidence," LSE Research Online Documents on Economics 55963, London School of Economics and Political Science, LSE Library.
    3. Ferdinand Rauch & Matthias Beestermoller, 2014. "A Dissection of Trading Capital: Cultural persistence of trade in the aftermath of the fall of the Iron Curtain," Economics Series Working Papers 718, University of Oxford, Department of Economics.
    4. repec:spr:anresc:v:60:y:2018:i:1:d:10.1007_s00168-017-0850-5 is not listed on IDEAS

    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913


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