Financial Development and Sectoral Output Growth in 19th Century Germany

4 A sectoral analysis

such as coal (5.3%) and half-manufactured goods such as iron (6.6%). Food products, such
as grain (3.4%) and sugar (2.3%) had a substantially smaller shares.¹⁶ Exports as a share of
production were also quite high within some sectors. The highest shares were recorded for
leather products (110%), metal products (93%) and textiles (99%) in 1910-13. Overall the
export share of production increases from 70% in 1875-79 to 95% in 1910-13.¹⁷

Although this evidence does not support the view that bank development was very impor-
tant for technological progress that occurred in manufacturing during the industrial revolu-
tion, it is remarkable that the patterns in 19^th century Germany are very similar to modern
emerging markets. In emerging markets it is typically found that the non-tradables sectors are
impacted the most by domestic banking system (see Tornell and Westermann (2005) and IMF
(2003)). Table 5 shows that this is also the case in 19^th century Germany, as both services
and transportation are clearly non-tradable. Due to the lack of modern refrigeration, the
output of the agriculture sector is likely to have been relatively non-tradable as well. Webb
(1977) documents that tariff protection was substantially higher in agriculture than in other
industrial sectors.

¹⁶See Hoffmann (1965), table 60, p.154.

¹⁷See Hoffmann (1965), table 70, p.158.

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