Discussion paper

DP4597 Explaining Anglo-German Productivity Differences in Services Since 1870

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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Citation

Broadberry, S (2004), ‘DP4597 Explaining Anglo-German Productivity Differences in Services Since 1870‘, CEPR Discussion Paper No. 4597. CEPR Press, Paris & London. https://cepr.org/publications/dp4597