DP15988 The Panopticon of Germany's Foreign Trade, 1880-1913. New facts on the First Globalization

Author(s): Wolf-Fabian Hungerland, Nikolaus Wolf
Publication Date: April 2021
Keyword(s): first globalization, German Empire, international trade, SITC
JEL(s): F14, N70, N73
Programme Areas: International Trade and Regional Economics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15988

Between 1871 and 1914 Germany became the second largest exporter in the world, just behind the UK. In this paper, we present and analyze the panopticon of Germany's foreign trade expansion before the First World War. Our new data covers historical trade data in terms of imports and exports of all traded products, all trade partners and both quantities and values of trade, at annual frequency for the years 1880 to 1913. To allow for comparisons over time and in the cross-section, historical product categories are re-classified according to the Standard International Trade Classification (SITC). This granular data reveals three new insights. First, nearly all trade growth before 1914 took place along the extensive margin, in line with trade models based on within-sector heterogeneity. Second, a substantial share of foreign trade before 1914 was intra-industry, measured at five-digit SITC classification. Third, by 1914 Germany had firmly established a dominant international position in chemicals, machinery and transport equipment, particularly within Europe. We argue that this has broader implications for our understanding of the First Globalization.