Economic and Industrial Growth: A Comparative Study of Late 19th and Early 20th Century Nations
Economic and Industrial Growth: A Comparative Study
1. Economic Unification and Industrialization: Germany and Italy
In the pre-modern era, both Germany and Italy experienced stalled economies, fragmented and influenced by foreign powers. Italy, in particular, had lost control of its financial affairs. Until 1850, its industry primarily consisted of silk production and a modest metallurgical sector. However, thanks to enterprising landowners, Italian agriculture transformed into one of the most prosperous and advanced in the region.
Economic disparities between Italian regions were significant. The North, with slightly higher agricultural productivity and some industry, spearheaded the unification movement. With French financial and military support, the Kingdom of Sardinia defeated the Austro-Hungarian Empire, leading to Italy’s unification in 1861. During this period, exports increased, and imports tripled, offset by French investments in railroads, banks, and the growing public debt.
Unification addressed market fragmentation but required improvements in transport and communication. Italy continued relying on French capital, but this dependence eventually led to negative economic consequences for both nations. Near the century’s end, after the confrontation concluded and with new German capital, Italy experienced a small industrial boom that lasted until World War I.
2. Targeted Industrialization: Russia and Japan
In the early 20th century, the Russian Empire, a major power with vast territory and population, also held a strong overall economic position. However, it remained predominantly agrarian, with low agricultural productivity due to limited technology and capital.
Russian industrialization was largely a state-driven initiative, starting in the first half of the 19th century. The cotton industry led the growth, followed by beet sugar. Large modern cotton factories emerged, alongside metal workshops and machinery production. The construction of railways and the expansion of mining and metallurgy, often fueled by foreign contractors and capital, significantly boosted industrialization.
The government encouraged industrialization by attracting foreign capital for railroads, imposing high tariffs on steel imports, and facilitating the acquisition of modern equipment for steel and mechanical production. The late 19th century saw a surge in Russian industry, followed by a decline in the early 20th century, leading to war and revolution.
In the fifty years preceding World War I, the Russian economy modernized significantly but still lagged behind Western economies, particularly Germany.
Japan, meanwhile, was the first non-Western nation to experience substantial economic growth. Following political changes, the new government aimed to modernize the country by introducing Western industries. Shipyards, arsenals, foundries, machine shops, and pilot plants for textiles, glass, chemicals, cement, sugar, beer, and other products were established.
Japan, with limited natural resources, relied on copper and coal deposits, which contributed to exports and domestic consumption by 1920. However, the agricultural sector bore the responsibility of generating export revenue for industrial imports.
Two traditional Japanese textile industries, silk and cotton, relied on domestic raw materials. Modern machinery from France boosted silk production, but high tariffs imposed by buyers hindered its development. Tea, another agricultural export, declined in importance as rice exports, initially insignificant, became insufficient for domestic consumption due to population growth.
The cotton industry thrived, employing cheap labor, mainly women and girls. Heavy industry developed more slowly, supported by government subsidies and tariff protection. Overall, Japan’s economic transformation from a traditional society in 1850 to an industrial power by World War I was a remarkable achievement.