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The Yankees of Europe? A New View on Technology and Productivity in German Manufacturing in the Early Twentieth Century

  • Marcel P. Timmer (a1), Joost Veenstra (a2) and Pieter J. Woltjer (a3)

Abstract

Labor productivity in German manufacturing lagged persistently behind the United States in the early twentieth century. Traditionally, this is attributed to dichotomous technology paths across the Atlantic. However, various industry case studies suggest rapid diffusion of U.S. technologies in Germany. We develop a novel decomposition framework based on Data Envelopment Analysis (DEA) to reconcile these findings. We conclude that by 1936 inefficient assimilation of modern production techniques—and not the use of different techniques—accounted for most of the U.S./German labor-productivity gap. Our findings call for a reappraisal of the drivers behind cross-country differences in manufacturing performance.

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We thank Herman de Jong for providing us with his copies of the unpublished archival records of the German production census of 1936 and Tamás Vonyó for suggesting the title of the article. We are indebted to Paul Rhode, whose help has guided us to substantially improve the article. Furthermore, we thank Jochen Streb, Stephen Broadberry, Jan Luiten van Zanden, two anonymous referees and the participants of the 2012 World Economic History Conference, the 2014 Economic History Society Annual Conference, and the Wirtschaftsgeschichte Forschungsseminar at the University of Mannheim for useful comments and suggestions. We are responsible for all errors. This research was supported by a grant of the Netherlands Organization for Scientific Research (NWO; grant no. 360-53-102).

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