Germany’s early industrialisation: regional innovativeness and technology transfer, 1843-77

"In this paper we introduce a new dataset of over 1,500 patents granted in the Grand-Duchy of Baden between 1843 and 1877. Since almost 80 percent were owned by non-domestic patentees, the dataset sheds light on technology transfer within Germany and Europe. We show that technology transfer became increasingly important since the late 1850s. Thereby, innovative activity was concentrated within some major research economies and German regions. Compared to the period 1877-1914 this pattern remained fairly stable – except for the rise of the United States. Regional innovativeness cannot be explained with the emergence of strong technological clusters related to the leading industries of Germany’s early industrialization. Indeed, we only observe a strong specialization in these technologies in the Rhineland and the Prussian province of Saxony. Furthermore, our data suggests that the incentives to apply for patent protection were negatively influenced by distance due to boarder effects and high transaction costs. At last, we investigate the effects of technology transfer on the local research economy of Baden. Here, we find evidence for spillover-effects in agriculture-related technologies. However, in the case of textile and railway related industries, domestic inventors were crowded out by foreign competitors."