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Germany’s Early Industrialization:
Regional Innovativeness and Technology Transfer,
1843-1877*
Alexander Donges† and Felix Selgert‡
26 February 2016
Abstract
In this paper we introduce a new dataset of over 1,500 patents granted in the Grand-Duchy of Baden between 1843 and 1877. Since almost 80 percent were owned by non-domestic patentees, the dataset sheds light on technology transfer within Germany and Europe. We show that technology transfer became increasingly important since the late 1850s. Thereby, innovative activity was concentrated within some major research economies and German regions. Compared to the period 1877-1914 this pattern remained fairly stable – except for the rise of the United States. Regional innovativeness cannot be explained with the emergence of strong technological clusters related to the leading industries of Germany’s early industrialization. Indeed, we only observe a strong specialization in these technologies in the Rhineland and the Prussian province of Saxony. Furthermore, our data suggests that the incentives to apply for patent protection were negatively influenced by distance due to boarder effects and high transaction costs. At last, we investigate the effects of technology transfer on the local research economy of Baden. Here, we find evidence for spillover-effects in agriculture-related technologies. However, in the case of textile and railway related industries, domestic inventors were crowded out by foreign competitors.
Keywords: Industrialization, Innovation, Patents, Technology transfer.JEL classification: N43, N74, N93, O14, O19, O33, O34, O38
* We thank Jochen Streb for his valuable comments and for sharing his patent data for the period 1877-1913. We also appreciate the comments of the discussants at the Sound Economic History Workshop in Lund.
† †Alexander Donges is postdoctoral researcher at the University of Mannheim, Department of Economics; email: [email protected].
‡ ‡Felix Selgert is postdoctoral researcher at the University of Vienna; email: [email protected].
1. Introduction
It is generally agreed that the ability to produce a continuous stream of technological
innovations fostered the transition to sustained economic growth since the late 18 th century.*
In particular this is also true for Germany.† Albeit this consensus, almost no empirical
research was carried out on Germany’s national innovation system in the decades prior and
during the country’s first phase of industrialization between 1840 and 1880; though there is a
growing number of studies covering the period of the Second Industrial Revolution during the
last two decades of the 19th century. This can easily be explained by the availability of data.
Innovation is often measured by patenting activity,‡ but a harmonized German patent system
was not established until 1877. Research had been restricted by the lack of aggregated patent
records for earlier periods. However, patenting was already common before 1877, but the
laws and the actual practice of patent granting differed significantly between German states.§
Patent protection in one state did not imply patent protection in another state, and while some
states pursued a very patent-friendly policy, others restricted patent protection.**
In this paper, we analyze technology transfer during Germany’s First Industrial Revolution in
the mid-19th century, measured by foreign patenting activity. We introduce a novel and unique
patent dataset for the period between 1843 and 1877 using patent records from the Grand-
Duchy of Baden, one of the medium-sized German states. In Baden, a high share of patents
was granted to non-domestic inventors from other German states like Prussia or from foreign
countries like France. Therefore, our dataset allows us to draw general conclusions about
industrialization, patenting activity and the importance of technology transfer.
First, we show that technology transfer became increasingly important since the late 1850s.
Second, we identify regional centers of innovation from which technology diffused into
* J. Mokyr, The lever of riches: Technological creativity and economic progress, Oxford paperbacks (New York: Oxford Univ. Press, 1992), p. 4
† J. Streb, J. Baten and S. Yin, ‘Technological knowledge spillover in the German empire 1877-1918’, Economic History Review LIX (2006), 347–73
‡ Early works are from: K. L. Sokoloff, ‘Inventive Activity in Early Industrial America: Evidence From Patent Records, 1790–1846’, Journal of Economic History 48 (1988), 813 and B. Z. Khan and K. L. Sokoloff, ‘“Schemes of Practical Utility”: Entrepreneurship and Innovation Among “Great Inventors” in the United States, 1790–1865’, Journal of Economic History 53 (1993), 289. For a critical assessment of the use of patent statistics see: Z. Griliches, ‘Patent Statistics as Economic Indicators: A Survey’, Journal of Economic Literature 28 (1990), 1661–707 and J. Streb, ‘The Cliometric Study of Innovations’, in C. Diebolt and M. Haupert (eds.), Handbook of cliometrics (Berlin: Springer Reference, 2016), pp. 448–68.
§ Throughout this paper we refer to the member states of the German Empire as ’German states’. Thus Austria is defined as a non-German state, although it was a member of the German Bund until 1866.
** A. Müller, Die Entwicklung des Erfindungsschutzes und seiner Gesetzgebung in Deutschland, Dissertation Universität München (München, 1898), p. 9
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Baden. We show that foreign patenting activity is negative influenced by distance due to high
transaction costs. Taking this effect into account, our results provide evidence for a strong
path-dependency, indicating that the most innovative regions remained quite stable over time.
Third, we ask which regions specialized in which technologies and whether we observe
technological clustering and local knowledge spillovers. Fourth, we are interested in the
effects of technology transfer on the local research economy of Baden. Over time, the number
of non-domestic patents grew much faster than the number of domestic patents. Inventors in
Baden may have profited from the disclosure of foreign technologies by adapting them and
with time developed own patentable inventions. We find evidence for spillover-effects in
traditional industries related to agriculture and the processing of agricultural goods, but not in
textile and railway related technologies, sectors that are typically associated with the
industrial revolution.
The paper essentially contributes to the empirical research about innovation in Germany. For
the period before 1877, no disaggregated patent data exists so that there is a general lack of
empirical research.* Our paper is a first step to fill this gap providing detailed information
about patenting activity in Germany before 1877, which allows us to analyze both the regional
distribution and the technological trends. In doing so, the paper complements research
focusing on the Second Industrial Revolution. Jochen Streb, Jörg Baten and Shuxi Yin
introduced a rich data-set of long lived high value patents after 1877, a sample that is based
on the published patent records of the Imperial Patent Office. The authors determine the
timing of technological cycles and the spatial distribution of innovative activity for the period
between 1877 and 1918.† Furthermore, Streb et al. identify industrial specialization in one of
the leading industries of the Second Industrial Revolution and the existence of clusters of
technologically related industries within a region as a crucial determinant of innovative
activity. In subsequent studies the latter argument is solidified by industry specific case
studies.‡ Another strand of literature focuses on national and international technology
diffusion. Carsten Burhop and Nikolaus Wolf show that Germany like the United States
* The literature only reports information about the total number of patents granted per year on the state-level so that the explanatory power of this data is very limited. A yearly time series is imprinted for the five leading German states in: P. Kurz, Weltgeschichte des Erfindungsschutzes: Erfinder und Patente im Spiegel der Zeiten : zum 100jährigen Jubiläum des Gesetzes betreffend die Patentanwälte vom 21. Mai 1900 (Köln, München [u.a.]: Heymanns, 2000), p. 346.
† Streb, Baten and Yin, ‘Technological knowledge spillover’.‡ J. Baten, A. Spadavecchia, J. Streb and S. Yin, ‘What made southwest German firms innovative around
1900? Assessing the importance of intra- and inter-industry externalities’, Oxford Economic Papers 59 (2007), i105-i126; J. Streb, J. Wallusch and S. Yin, ‘Knowledge spill-over from new to old industries: The case of German synthetic dyes and textiles (1878–1913)’, Explorations in Economic History 44 (2007), 203–23; R. Richter and J. Streb, ‘Catching-Up and Falling Behind: Knowledge Spillover from American to German Machine Toolmakers’, Journal of Economic History 71 (2011), 1006–31.
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developed a national technology market during the last two decades of the 19 th century;
though they observe considerable international and national border effects.* Harald Degner
and Jochen Streb focus on foreign patent activity in Germany between 1877 and 1932.† They
conclude that the distribution of foreign patents in Germany was time-invariant and highly
concentrated on a small number of research economics, first of all the United States,
Switzerland and the United Kingdom.
The remainder of the paper is organized as follows. The next section gives an overview of the
German patent system in the 19th century. In particular, this section argues why patents from
Baden are a useful measure and why non-domestic patents should represent high value patents
under the existing patent laws in this time.‡ The following section describes the data set in
more detail. In section four, we analyze how patenting activity evolved over time, while
section five identifies regional centers of innovation and compares these results with the
second half of the 19th century. Section six then analyzes regional technological specialization
while section seven investigates the effects of technology diffusion for the local research
economy of Baden.
2. The German patent law in the 19th century
A unique German patent law did not emerge until 1877, when the Imperial government
harmonized the multitude of different patent systems of the German states and introduced a
central administration, the Imperial Patent Office in Berlin. Before 1877, every German state
pursued its individual patent policy so that the specific rules and the actual practice of
patenting differed distinctly. Inventors had to apply for patent protection in each state
separately, making patenting very expensive. Furthermore, because some patent laws were * C. Burhop, ‘The Transfer of Patents in Imperial Germany’, Journal of Economic History 70 (2010), 921–39;
C. Burhop and N. Wolf, ‘The German Market for Patents during the “Second Industrialization,” 1884–1913: A Gravity Approach’, Business History Review 87 (2013), 69–93. For the United States cf.: Khan and Sokoloff, ‘“Schemes of Practical’; N. R. Lamoreaux and K. Sokoloff, ‘Inventors, Firms, and the Market for Technology in the Late Nineteenth and Early Twentieth Centuries’, in N. R. Lamoreaux, D. M. G. Raff and P. Temin (eds.), Learning by doing in markets, firms, and countries, National Bureau of Economic Research conference report (Chicago, Ill.: University of Chicago Press, 1999), pp. 19–60; N. R. Lamoreaux and K. L. Sokoloff, ‘Market Trade in Patents and the Rise of a Class of Specialized Inventors in the 19th-Century United States’, The American Economic Review 91 (2001), 39–44.
† H. Degner and J. Streb, ‘Foreign patenting in Germany: 1877-1932’, in P.-Y. Donzé and S. Nishimura (eds.), Organizing Global Technology Flows: Institutions, Actors, and Processes (Routledge, 2013), pp. 17–38
‡ This is important, because a patent may also been granted to an invention that is not useful in economic terms. Considering only those patents which were not received without significant costs takes this criticism into account. See: Streb, The Cliometric Study. However, one should also have in mind that patent statistics are only “second best measures” for a region’s innovative activity ( Ibid., p. 450). There are two reasons for this limitation. First, not all innovations are patentable. Second, not all industries have the same propensity to patent their inventions. For a quantification of these two points see: P. Moser, ‘Innovation without Patents: Evidence from World’s Fairs’, The Journal of Law and Economics 55 (2012), 43–74.
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more restrictive than others, a successful grant application in one state did not necessarily
imply that the invention received patent protection in a second German state.*
Although the harmonization of the German patent law was not successful before 1877, there
had been earlier attempts of legal unification. Since the late 1830s, the patent-friendly
Southern states, Baden, Bavaria and Wuerttemberg, as well as Saxony promoted the
harmonization of the patent law within the German Custom Union, the Zollverein.† Yet,
stalemate between the supporters of legal unification and its adherents blocked an agreement.
Although Prussia promoted the liberalization of trade, it effectively blocked all attempts to
create a unique patent law within the Zollverein. The Prussian position was strongly
influenced by the free trade movement which did not only promote the free flow of goods but
also of ideas and knowledge.‡ The result of the negotiations was thus a meagre compromise.
According to the Zollverein agreement of 21 September 1842, only the original inventor could
legally apply for patent protection in any member state if the same invention was already
granted protection in another member state.§ For this reason, the member states agreed to the
mutual exchange of information about patents, but there were no serious attempts to establish
a unique patent register. As a result, an all-embracing patent statistic does not exist for the
period before 1877. However, the agreement of 1842 did not imply the right to automatic
patent protection in all member states of the Custom Union. On the contrary, the Zollverein
even restricted regional patent protection in 1842 by stipulating that conferment of a patent in
an individual state of the Zollverein did not establish the right to ban the import and the usage
of imported goods that were identical with goods protected by the awarded patent.** Only
machine tools for the use in production facilities were exempt from this stipulation.†† From
the inventors’ perspective, this was an inadequate solution since they had to get a patent grant
in as many member states as possible in order to protect their inventions effectively.
Otherwise, there was a high risk of imitation. This can be illustrated by the following
example: Assume that an inventor from Cologne received a patent for a new type of breaking
* For an general overview: Kurz, Weltgeschichte des Erfindungsschutzes, pp. 324-586.† The Zollverein was founded in 1834. When the Kingdom of Hannover and the Grand Duchy of Oldenburg
joined the union in 1854, the union spanned nearly the complete territory of the subsequent German Empire; for the discussion about the harmonization of patent law in the Zollverein: A. Heggen, Erfindungsschutz und Industrialisierung in Preußen: 1793 - 1877, Studien zu Naturwissenschaft, Technik und Wirtschaft im neunzehnten Jahrhundert Forschungsunternehmen "Neunzehntes Jahrhundert" der Fritz Thyssen Stiftung (Göttingen: Vandenhoeck & Ruprecht, 1975), vol. 5, pp. 42–7; Kurz, Weltgeschichte des Erfindungsschutzes, pp. 347–50.
‡ Heggen, Erfindungsschutz und Industrialisierung, vol. 5, pp. 72-82.§ Müller, Entwicklung, p. 38; Kurz, Weltgeschichte des Erfindungsschutzes, pp. 349–50.** W. Fischer, Der Staat und die Anfänge der Industrialisierung in Baden 1800-1850: Erster Band. Die
staatliche Gewerbepolitik (Berlin: Duncker & Humblot, 1962), p. 90; Kurz, Weltgeschichte des Erfindungsschutzes, pp. 349–50.
†† Ibid., pp. 349–505
system for railway cars in Prussia, but he did not apply for patent protection in Baden. In this
case, a competitor from Baden could not only copy, produce and sell similar engines within
Baden, he could also export these engines to Prussia without getting in conflict with the law.
Thus, the inventor from Cologne has to apply for patent protection both in Prussia and other
German states to prevent competitors from copying and exporting his product.*
Hence, there was a strong incentive for an inventor to apply for patent protection in every
state of the Zollverein – or not at all. This argument also applies to non-German inventors.
The decision to apply for patent protection in foreign states was mainly influenced by two
factors. On the one hand, the existence of a potential market for the product or the technology
related to the patent, and, on the other hand, a high risk of imitation through competitors.† The
latter statement is a vital part of our argument, because, as Petra Moser has shown, patent
protection is only necessary when the affected technologies can easily be copied and secrecy
is no option.‡ As soon as an inventor decided to reveal his technology in a member state of the
Zollverein, he confronted the risk of imitation in adjunct member states. We argue that this
strategy was only applied to high value patents, those patents that promised high profits in the
future, since multi-patenting was very expensive. The inventor had to pay application fees in
every member state of the Zollverein, and, furthermore, he typically had to spend additional
money for lawyers and agents on the ground. In the case of non-German inventors the
transaction costs were even higher due to fees for the translation of patent description as well
as greater monitoring effort. Thus, potential patent-value may have been on average even
greater than for patents granted to German inventors.
Different cost structures make it difficult to produce an exact estimation of application fees.
Yet, in Baden a successful patentee had to pay between 35 to over 100 guilders (fl.). § In
Bavaria fees were dependent on the lifetime of a patent; protecting a technology for five years
produced costs of ca. 60 fl., extending the lifespan of the patent to another five years boosted
total costs to 150 fl.** For Prussia, the fees amounted at least to 100 Thaler (= 175 fl.).†† Given
* For non-Zollverein members relatively high tariff barriers made this kind of imitation process more costly.† Cf.: Streb, The Cliometric Study, p. 451.‡ P. Moser, ‘How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World's Fairs’,
The American Economic Review 95 (2005), 1214–36; Moser, ‘Innovation without Patents’.§ Submission fees consisted of several components. There was first an application fee (Sportel) of ca. 5
guilders; furthermore an applicant had to use special sheets which cost around 1 guilders each. Finally there was a fee on awarding the patent between 50 and 100 guilders; Großherzogtum Baden, Tax-, Sportel- und Stempelordnung für das Großherzogtum Baden: mit Einschluß der Hoheitslande (Karlsruhe, 1807).
** Müller, Entwicklung, p. 26.†† Ibid., p. 13. The Zollverein set the relation of Thaler to Guilder to 1.75 fl. = 1 Thaler, cf. W. Trapp, Kleines
Handbuch der Münzkunde und des Geldwesens in Deutschland, Universal-Bibliothek (Stuttgart: Reclam, 1999), vol. 18026, p. 99.
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that the annual income of craftsmen and workers during the middle of the 19th century are
estimated to be around 182 fl., patent fees were relatively high.*
The high transaction costs that were intertwined with multi-patenting make it plausible that
inventors only registered technologies with high economic value in foreign states.† We
therefore concentrate on foreign patents to extent our knowledge about Germany’s national
system of innovation to the period of the country’s pre-industrialization and “take-off” phase.‡
The fact that we choose patents granted in Baden is not only motivated by the availability of
data but also by its patent system, which was less restrictive than the Prussian one.§ Therefore
the patent law in Baden rather resembles the nationwide law that was established in 1877 than
its Prussian counterpart. This allows, to some degree, for comparisons with the dataset on
high-value patents collected by Streb et al. for the period after 1877.** The differences
between the major German patent regimes are also illustrated by TABLE 1.
[Insert TABLE 1 here]
TABLE 1 reports the average number of all patents granted per year in the five largest German
states between 1841 and 1877.†† The figures include both domestic and foreign patents. In
addition to the absolute numbers, we provide the average number per million inhabitants in
order to account for differences in population size. Saxony and Wuerttemberg granted not
only the highest absolute number on average but also in relation to the population. By far the
lowest number of patents per capita was granted in Prussia. In Baden, we observe a relatively
* R. Gömmel, Realeinkommen in Deutschland: Ein internationaler Vergleich, (1810-1914), Vorträge zur Wirtschaftsgeschichte (Nürnberg: Selbstverlag, 1979), vol. 4. Gömmel reports incomes in Mark. We convert his estimates into guilders using the official exchange rate of 1 fl. = 1.71 Mark reported by Trapp, Münzkunde, vol. 18026, pp. 110–5.
† Streb, The Cliometric Study, p. 451. ‡ W. W. Rostow, The Stages of Economic Growth: A Non-Communist Manifesto (Cambridge: Cambridge
University Press, 1960). The exact timing of the shift to industry as the major source of growth is controversial. Some scholars put it to the early 1840s others to the 1860s. Cf. H.-W. Hahn, Die Industrielle Revolution in Deutschland, Enzyklopädie deutscher Geschichte, 3., um einen Nachtr. erw. Aufl. (München: Oldenbourg, 2011), vol. 49, pp. 90–2.
§ Baden was only a medium-sized state with roughly 1.4 million inhabitants in 1850, while 16.5 million people lived in Prussia, the largest German state.Population figures from G. Franzmann, Histat-Datenkompilation: Stand und Bewegung der Bevölkerung des Deutschen Reichs, der Deutschen Staaten und der Regionen, 1841 bis 1886: ZA8565 (Data file version 1.0.0). http://www.gesis.org/histat/de/data.
** Streb, Baten and Yin, ‘Technological knowledge spillover’. The authors define high-value patents as all patents with a lifespan of more than ten years. According to the federal patent law a patent had to be renewed annually while renewal fees increased with each extension. Thus only economically valuable technologies were protected for a longer time span.
†† Aside from Prussia, Saxony and the Southern states, formal patent rules had also been established in the smaller German territories, but it is also worth to point out that there was still a group of backward-oriented states where it was not possible to get patent protection at all until 1877. The latter include the free cities of Hamburg, Bremen and Lübeck as well as in the Grand Duchy of Mecklenburg-Schwerin and the Duchy of Mecklenburg-Strelitz ); Müller, Entwicklung, p. 34.
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low number in absolute terms, but due to the smaller population the number of patents granted
per capita was more than seven times higher than in Prussia and distinctly higher than in
Bavaria. There is no clear evidence that the degree of industrialization was causal for this
disparity. Regional studies show that important proto-industrial centers emerged both in
Saxony and Wuerttemberg, but this argument holds also for the Rhineland, Westphalia and
Silesia, regions that were all part of Prussia.* By contrast, Bavaria was for the main part an
agricultural state, but the number of patents granted per capita was distinctly higher than in
Prussia. Thus, there is strong evidence that these figures reflect rather failed legal unification
and significant differences between the regional patent laws than the degree of economic
development.
The low number of patent grants in Prussia can be explained by its restrictive policy.† In
Prussia, where patent policy had been shaped by the free trade movement and economic
liberalism. Formal patent rules existed since 1815, including an evaluation of all applications
by a technical commission, but the Prussian administration set very restrictive rules so that
only a relatively small number of patents had been eligible for patent protection and patent
grants were very expensive.‡ In this context contemporary sources estimate that the technical
commission refused roughly 80 percent of all patent applications.§ Furthermore, additional
restrictions were set in Prussia: Inventions related to agriculture or health care could get no
patent protection at all, and foreign inventors had been discriminated for a long period of
time.**
By contrast, the government of Baden pursued a policy in favor of patent protection. Early
forms of patenting had been established in 1808. In this year, the state of Baden assigned the
first privilege (Privilegium), which initially included a lifetime protection not only for the
inventor but also for his wife and his successors.†† However, the maximal duration of
subsequent privileges was later limited. In contrast to other German states, Baden also
pursued a more liberal allocation procedure by frequently awarding patents to foreigners. A
* H. Kiesewetter, Industrielle Revolution in Deutschland: Regionen als Wachstumsmotoren, Geschichte, [Neuausg.] (Stuttgart: Steiner, 2004); S. C. Ogilvie, ‘Proto-industrialization in Germany’, in S. C. Ogilvie (ed.), European proto-industrialization (Cambridge: Cambridge Univ. Press, 1996), pp. 118–36, at pp. 132-35.
† For an overview of patent policy in Prussia: Heggen, Erfindungsschutz und Industrialisierung, vol. 5.‡ In Prussia, the patent system based on the “Publicandum about the granting of patents”, a statutory ordinance
proclaimed by the Prussian government in 1815. Inventors had no formal legitimate claim to get a patent granted, but we can argue that, in practice, a factual claim existed if the patent application satisfied all formal and substantive requirements; Müller, Entwicklung, pp. 12-13.
§ Ibid., pp. 18-19.** They could only get patent protection by applying for the Prussian citizenship or registering the patent for an
agent with the Prussian citizenship; Ibid., p. 14.†† Ibid., p. 8.
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formal system of patent protection was established in 1845, when the Ministry of the Interior
of Baden decreed a detailed set of rules that described the requirements and the process of
patent granting. All patent applications were subject to a reviewing process by a commission
of technical experts, ensuring that only new, useful and significant products or production
technologies got a patent grant.* This contrasts with the practice in Bavaria and Wuerttemberg
where the administration was satisfied with the control of formal requirements.† Based on the
1845 decree, Baden assigned patents until 1877. Patents were typically granted for three or
five years, but both a longer lifespan and the extension of an expiring patent were possible.
We argue that the patent system in Baden was on the one hand more restrictive than in
Bavaria or Wuerttemberg, where no review of a technical commission was necessary, on the
other hand it was less restrictive than in Prussia, where only a relatively small number of
inventions got patent protection. Therefore, data on foreign patentees that got patent
protection in Baden, allows us to explore the importance of innovation and technology
transfer during the first wave of industrialization.
3. The dataset
Our dataset includes all patents granted in the state of Baden between 1843 and 1877. It is
based on hand-written patent records compiled by the Ministry of the Interior.‡ The records
provide information about the name of the patentee, his place of residence, the date when the
patent was granted, its duration and a brief technical description of the underlying invention.
Furthermore, we can identify whether the original inventor received the patent, and whether
the grant was related to a new invention or to the extension of an old patent. The original
patent records do not classify patents according to technological classes like it is common for
records published in later periods. We therefore assign a class for each patent based on the
technical description in the patent records. For reasons of comparison, we use the
classification scheme that was introduced by the Imperial Patent Office in 1877. It
distinguishes between 89 different main technological classes.
* Ibid., p. 31.† Ibid., p. 8.‡ Großherzoglich Badisches Ministerium des Inneren, Die Verzeichnisse der im Großherzogtum Baden
erteilten Erfindungspatente (1843-1866) and Großherzoglich Badisches Ministerium des Inneren, Die Verzeichnisse der im Großherzogtum Baden erteilten Erfindungspatente (1867-1877), in: Generallandesarchiv Karlsruhe (GLA) section 236, fascicles 5914 and 5916. The patents granted between 1852 and 1862 are also published in: R. Dietz, Die Gewerbe im Großherzogtum Baden: Ihre Statistik, ihre Pflege, ihre Erzeugnisse, (im Auftrag des ghzg. bad. Handelsministeriums) (Karlsruhe, 1863).
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TABLE 2 reports some basic information about our dataset. It includes in total 1,584 patent
grants, thereof 1,459 are related to new patents. As additional information, we also list the
number of patent extensions, 125 in total. The upper panel of TABLE 2 distinguishes between
patents that are owned by the original inventor and patents where the original inventor was
not the patentee. The great majority, 96 percent of all new patent grants, falls into the former
category. The middle panel of TABLE 2 presents information about the different types of
patentees, more precisely individual inventors, private partnerships and corporations.* This
gives us a better understanding in which context inventions were developed. Individual
inventors owned roughly 85 percent of all new patents and private partnerships account for 12
percent, corporation made only up to less than three percent of all new patent grants. This
corresponds with the findings of Tom Nicholas that still in the last quarter of the 19 th century
the share of individual inventors accounted for almost 90 percent in Britain, more than 90
percent in the United States and 100 percent in Japan.†
[Insert TABLE 2 here]
In the lower panel of TABLE 2, we report the location of the patentees. About 19 percent of all
new patents were granted to domestic patentees, defined as individuals, partnerships or
corporations that were located in the state of Baden.‡ Foreign patentees from other German
states, for example Prussia or Wuerttemberg, account for 42 percent and non-German
countries, for example France or Switzerland, represent roughly 38 percent. Together, non-
domestic patents thus made up to 80 percent of all patents granted in Baden between 1843 and
1877. As argued in section 2, we assume that these patents should in general reflect inventions
with a higher economic value than domestic patents due to the fact that transaction and
information costs were very high during the 19th century. We therefore concentrate our
empirical analysis on the sub-sample of foreign patents.
We only include new patent grants in order to avoid double counting. Furthermore, we do not
distinguish whether the patentee was also the inventor or not. The number of non-inventor
* We code the patentees as a private partnership if the patent was granted to more than one person or to firm lacking a legal entity. Joint stock companies and other firms that can accurately be identified as legal entities are coded as corporations.
† T. Nicholas, ‘The Role of Independent Invention in US Technological Development, 1880-1930’, Journal of Economic History 70 (2010), 57–82; T. Nicholas, ‘Independent invention during the rise of the corporate economy in Britain and Japan’, Economic History Review 64 (2011), 995–1023.
‡ Since there are patents owned by two or more patentees from different countries, we computed a simple score. This score is equal to one if one or more than one patentees live in the same country. If, for example, a patent is owned by both a patentee from Baden and France than each patentee gets a score of 0.5. To compute the aggregated figures we summed up the scores, but we only report rounded figures in the respective tables.
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patents is very small and a high share of these patents is related to firms so that we assume
that the invention was created within the firm. Including patents of non-inventors would only
bias our results if we focused on domestic patents. In this case, we would overestimate
Baden’s innovativeness by including inventions from foreigners that licensed their inventions
to entrepreneurs from Baden who then got the official grant. However, we only observe 10
domestic patents for which the patentee is not the inventor. Lastly, we do not analyze
individual inventors, partnerships and corporations separately due to the small number of
patents within the latter groups.
4. Growing patent activity and the business cycle
Germany was among the late-comers in the process of industrialization in Europe. However,
there is some academic debate about its starting point. The lack of accurate GDP estimates
makes it difficult to determine its breakthrough. Some scholars argue that the economy
already took off during the 1840s,* so that there seems to be a parallel to the emergence of
railways. The first German railway line started to operate between the Franconian cities of
Nuremberg and Fürth in 1835, and railway companies expanded massively in the first half of
the 1840s. Railway construction was indisputably one of the leading sectors in Germany,† but
relative to the total economy it was not yet important in this period. In the 1840s, a Pauperism
crisis hit Germany as a result of bad harvests, illustrating that agriculture still shaped the
business cycle. Therefore, other scholars argue that the breakthrough of industrialization was
much later, more precisely in the 1860s.‡ Our patent data support the view of late
breakthrough.
As FIGURE 1 shows, the total number of patents granted in Baden rose considerably after
1855 but then stagnated for several years. A second upward movement followed after the
Austrian defeat in the Austro-Prussian War of 1866, only interrupted in 1871 as a result of the
German-French War. If we compare patenting activity with estimated real net investment in
Germany, plotted on the right axis of FIGURE 1, we observe a similar trend behavior. Because * For this interpretation cf.: R. H. Tilly, Vom Zollverein zum Industriestaat: Die wirtschaftlich-soziale
Entwicklung Deutschlands 1834 bis 1914, dtv (München: Dt. Taschenbuch-Verl., 1990), vol. 4506; H.-U. Wehler, Deutsche Gesellschaftsgeschichte: Von der Reformära bis zur industriellen und politischen "Deutschen Doppelrevolution" 1815-1845/49, 4. Aufl., 5 vols. (München: Beck, 2005), vol. 2. For a concise overview summary of the debate cf.: Hahn, Die Industrielle Revolution, vol. 49, pp. 90–6.
† R. Fremdling, ‘Railroads and German Economic Growth: A Leading Sector Analysis with a Comparison to the United States and Great Britain’, Journal of Economic History 37 (1977), 583–604.
‡ S. Sarferaz and M. Uebele, ‘Tracking down the business cycle: A dynamic factor model for Germany 1820–1913’, Explorations in Economic History 46 (2009), 368–87, at 383–5 and K. Borchardt, ‘Wirtschaftliches Wachstum und Wechsellagen, 1800-1914’, in H. Aubin (ed.), Handbuch der deutschen Wirtschafts- und Sozialgeschichte (Stuttgart: Klett-Cotta, 1976), vol. 2, pp. 198–275.
11
population growth was small, the same pattern can be observed by using patents per capita. In
Baden, population rose from 1.3 million in 1843 to 1.5 million in 1876, implying an average
yearly growth rate of 0.43 percent. By contrast, the number of patents granted increased in the
same period on average by 12.78 percent per year. Domestic patenting also grew significantly
in the course of time, but patents granted to foreigners were the main driver of the upswing
which started in the late 1860s. While patentees from Baden accounted on average for 25
percent of all grants in the 1850s, their share dropped to 23 percent in the 1860s and merely
14 percent in the period between 1870 and 1876. Thus, the breakdown of patents by patentee
indicates evidence of vigorous and growing technical transfer within Europe. Our findings for
such an early period are remarkable, since Petra Moser argues that around the middle of the
19th century high transaction costs prohibited foreign patenting.*
[Insert FIGURE 1 here]
5. Long-term regional innovativeness
Empirical studies provide evidence for a high concentration of innovation within a small
number of countries and regions and a strong path-dependency over time. For the United
States, Sokoloff shows in a seminal study that patenting activity was heavily skewed towards
Southern New England and New York during the first half of the 19 th century.† Nicholas
identifies the counties in north and especially south-east England as by far the most
innovative clusters in the United Kingdom between 1880 and 1930.‡ In Japan, which started
to catch-up in the same period, innovative activity was concentrated in the Kanto region and,
to a lesser extent, to the Chubu and Kinki regions.§ As Streb et al. show for the period
between 1877 and 1918, there was also a strong regional variation of patenting activity within
Germany, indicating that the most innovative clusters were located along the Rhine, in
Greater Berlin and Saxony.** Furthermore, Degner and Streb point out that the United States,
the United Kingdom, France and Switzerland represent the countries with the highest share of
high-value patents granted in Germany between 1877 and 1914, and these countries were still
* Moser, ‘How Do Patent’, 1216.† Sokoloff, ‘Inventive Activity’, 827‡ Nicholas, ‘Independent invention during’, 1001. With time the lead of south-east England became even more
pronounced. However, note that Nicholas focuses on independent inventors which made up for ca. 90 percent of all patents in Great Britain in 1880 and ca. 50 percent in 1930.
§ Ibid., p. 1002. The Chubu region lost its innovative edge over time while the Kinki region became more innovative. Note again that Nicholas only reports data for independent innovators. Their share toted up to 100 percent in 1890 until 1930 it decreased to ca. 50 percent.
** Streb, Baten and Yin, ‘Technological knowledge spillover’, 366.12
among the most innovative today.* Apart from Japan, no country could catch up to these
leading countries during the 20th century.† Our data confirms this results indicating that
already in the middle of the 19th century a small number of countries and regions accounted
for a very high share of patents, and even within regions patenting activity was concentrated
in a small number of cities. Furthermore, there is evidence for strong persistence over time.
In the following, we use patents granted to non-domestic patentees in Baden as a proxy to
identify regional clusters of innovation within Germany and Europe in the period before 1877.
TABLE 3 lists all states with at least 20 observations in our dataset. In addition, Prussia is split
up in smaller territorial units because of its size, differences in institutions and historical
origins. We distinguish between the Prussian mainland in the East including Berlin and
territories in Central and West Germany that Prussia gained after the Napoleonic Wars
(Rhineland and Westphalia, Prussian province of Saxony) and the Austro-Prussian War of
1866 (Hannover, Hesse-Nassau).‡ Furthermore, we separate Alsace-Lorraine from the rest of
France for two reasons: First, the region became part of Germany in 1871 which might have
affected the incentives of Alsatian inventors to apply for patent protection in Baden. Second,
Alsace-Lorraine was an important trading partner and provider of foreign direct investment to
Baden.§ Together 1,026 patents, out of a total number of 1,154 patents granted to non-
residents, were bestowed on patentees from these nine countries. The number of countries that
exported technology to a noticeable extent was thus highly concentrated with 89 percent of all
patents originating from these nine leading states.**
[Insert TABLE 3 here]
Prussia was the most important source of technology transfer with 327 patents, representing a
share of 28.4 percent. Within Prussia, the mainland accounts for the highest number of
patents, but was less innovative than the provinces in the West if we take differences in
population into account (column five in TABLE 3). Actually, the Prussian mainland in the East
was mainly dominated by agriculture, except of Berlin, which had indeed a major cluster of
* Degner and Streb, Foreign patenting; Streb, The Cliometric Study, pp. 443-445.† J. Cantwell, Technological innovation and multinational corporations (Oxford: Blackwell, 1989); K. A.
Hafner, ‘The pattern of international patenting and technology diffusion’, Applied Economics 40 (2008), 2819–37.
‡ The remaining Prussian territories include Hohenzollern, a small principality in Southern Germany, and Schleswig-Holstein.
§ Cf.: F. Ploeckl, ‘The internal impact of a customs union; Baden and the Zollverein’, Explorations in Economic History 50 (2013), 387–404.
** A high concentration of innovative countries is the norm. Cf. Streb, The Cliometric Study and Degner and Streb, Foreign patenting.
13
innovation. A relatively high number of patents also originated from Wuerttemberg, the
neighboring state of Baden in the West, Bavaria and the Kingdom of Saxony. However, the
number of patents per inhabitants was much larger in Wuerttemberg than in the latter two.
Within the group of non-German states, France was the country from which most patents
originated. Including Alsace-Lorraine, it accounted for 226 patents, representing a share of
19.4 percent. However, relative to its large population, the number of patents was quite small.
By contrast, Alsace-Lorraine and Switzerland, which were both neighboring regions of Baden
were important in absolute terms but the number of patents is also high relative to population
size. A high share of patents also originated from the United Kingdom, Austria-Hungary and
the USA, but as in the case of France the numbers are relatively small if we take population
size into account.
The distribution of patentees suggests that, for the 19th century, distance was a crucial factor in
explaining regional differences in foreign patenting activity. We illustrate this pattern in
FIGURE 2. It reports the number of patents originated for each respective country or region
between 1843 and 1877 divided by its mean population on the y-axis and distance to Baden in
logarithmic scale on the y-axis. The size of the bubbles are proportional to the total number of
patents indicating the countries and regions that were quantitatively relevant in our dataset.
We observe a significantly negative relationship with territories closer to Baden receiving
more patents per population. Our data thus support the findings of Burhop and Wolf, who
show that there were considerable distance and border effects in the German market for
patents between 1884 and 1913.*
[Insert FIGURE 2 here]
Patenting activity was not only concentrated in a couple of states, it was even more
concentrated within states. This pattern is illustrated in TABLE 4, in which we report the
number of places with at least one patent observation, the share of the most innovative city,
the share of the top three innovative cities as well as the Herfindal-Hirschmann Index (HHI).
The HHI provides a measure of concentration within each state or region with a HHI equal to
one indicating the highest level of concentration, while a HHI of zero represents a perfect
uniform distribution.
[Insert TABLE 4 here]
* Burhop and Wolf, ‘The German Market’.14
Within the group of German states, we observe the highest degree of concentration in the
Prussian province of Saxony, for which we compute a HHI of 0.61. Its major cluster of
innovation, the city of Magdeburg, accounts for roughly 78 percent of all observations in this
region. Concentration was also high in the Prussian mainland and the province of Hesse-
Nassau, given a HHI of 0.49 and 0.44 respectively. Berlin represents about 70 percent of all
patents observed for the Prussian mainland, and Frankfurt am Main the main cluster of
innovation in Hesse-Nassau with a share of 66 percent. By contrast, our data indicates a
distinctly lower level of concentration for the Rhineland and Westphalia. The most innovative
cluster in this region, Cologne, accounts for only 20 percent of the patents and the HHI is only
0.08. In other German regions, patenting activity was more massed than in the Rhineland and
Westphalia, but the level of concentration was lower than in the highly concentrated Prussian
provinces. The HHI ranges between 0.15 in the Kingdom of Saxony and 0.29 in Hesse-
Darmstadt. Within the group of non-German states, the picture looks similar. We observe a
high level of concentration in France, excluding Alsace-Lorraine, where Paris was by far the
most innovative city accounting for 72.5 percent of all patents. Patenting activity was also
concentrated in Austria-Hungary with a HHI of 0.37. However, in Switzerland, the United
Kingdom, and the United States as well as in Alsace-Lorraine, our observations are
distributed more equally across cities. The HHI ranges between 0.15 in Switzerland and 0.21
in the United Kingdom.
As mentioned above, innovative activity tends to concentrate within certain countries and
regions. Yet, the question remains, whether concentration is stable over time or if declining
centers of innovation were replaced by new upstarting regions. The former may imply that
early innovators could have benefitted from spillover effects between geographically related
regions originating from a cluster of entrepreneurs, technicians, artisans and venture
capitalists.* We therefore compare our findings with patenting activity in the German Empire
after the introduction of the German Patent Law in 1877. For this period, Jochen Streb et al.
analyze the regional distribution of patenting based on a sample that includes all patents
granted in Germany with a lifespan of at least 10 years.† Based on their data, we aggregate the
number of high-value patents for each state and province for the two subsamples 1877-1899
and 1900-1913, respectively. For reason of comparison, we exclude all patentees from Baden
and Alsace-Lorraine. TABLE 5 reports the ranks for the 10 most innovative regions, based on
the absolute number of patent observations for our Baden sample (1843-1877) and the sample
of Streb et al. (1877-1899 and 1900-1913).* Cf. Streb, Baten and Yin, ‘Technological knowledge spillover’ and Degner and Streb, Foreign patenting.† Streb, Baten and Yin, ‘Technological knowledge spillover’, 366.
15
[Insert TABLE 5 here]
Both the Prussian mainland and the provinces of the Rhineland and Westphalia accounted for
the highest share of patents in all three samples. However, the relative positions differ to some
extend at the lower ranks. In particular, Wuerttemberg is ranked third in our dataset, but only
seventh in 1877-1899 and sixth in 1900-1913, while Saxony accounted for a relatively higher
number of patents in the period after 1877 so that it reaches rank three, in comparison with
rank five in our Baden-sample. The literature provides strong evidence that Saxony was by far
one of the most developed regions in the middle of the 19 th century with a strong focus on
textile industry and machine-building, while industrialization was less advanced in
Wuerttemberg.* Neither a catching-up process in Saxony nor a relative decline of
Wuerttemberg may provide a sound explanation for this pattern. Therefore, we suggest that
the differences in foreign patenting activity were driven by the geographical location of the
region of origin. As we have argued above and in FIGURE 2, transaction costs were a crucial
factor in this period, which naturally increase with distance. Wuerttemberg shared a long
border with Baden, while Saxony was in the East of Central Germany, implying that an
inventor in Wuerttemberg had a higher incentive to apply for a patent grant in Baden than an
inventor from Saxony. After 1877, this was not relevant any more due to the harmonization of
the German patent system. We so overestimate the innovativeness of neighboring regions in
our dataset to some extent. Accounting for the bias to neighboring countries, the pattern of
innovative regions within Germany seems to be relatively time persistent. Early innovators
thus remained innovative implying that these regions benefited from spillover effects between
geographically related industries.
We observe a stronger path-dependency by comparing the ranks of patents originating from
non-German countries in our dataset with foreign patenting after 1877. TABLE 6 shows that
the ranking of the countries remained relatively stable supporting the findings of Degner and
Streb for the period 1877-1932.† However, we observe some minor shifts. France ranked first
in our dataset but it is ranked third after 1877. For reasons of comparison, we excluded all
patents from Alsace-Lorraine in all subsamples so that we can exclude the cession of this
* The following figures illustrate the differences in industrialization: In 1846, 172 spinning mills were in operation in the Kingdom Saxony in comparison with 59 in Wuerttemberg, although the population was almost the same (1,8 million in Saxon and 1,7 million in Wuerttemberg); Kiesewetter, Industrielle Revolution in, p. 171. The lead of Saxony seems to be even more impressive if we compare its 232 machine-building factories in 1846 with only 17 that were installed in Wuerttemberg; W. Becker, ‘Die Entwicklung der deutschen Maschinenbauindustrie von 1850 bis 1870’, in A. Schröter and W. Becker (eds.), Die deutsche Maschinenbauindustrie in der industriellen Revolution (Berlin: Berlin : Akademie-Verl., 1962), pp. 137–285.
† Degner and Streb, Foreign patenting.16
province to Germany as an explanation. Distance provides a sound explanation for this
pattern. Transaction costs decreased in the course of time as a result of innovations in
communication and transportation so that inventors from more distant places got higher
incentives for patent protection. This can even more explain the increasing importance of the
United States. Since 1866, the Atlantic telegraph cable allowed for the fast transmission of
information between the New and the Old World, and the emergence of steamships fostered
the growth of international trade.* It thus seems highly plausible that falling transaction costs
increased incentives for inventors in the United States to apply for patent protection in
Europe.† However, the increasing share of patents originated from the United States also
reflects the stronger population growth and the fact and that the United states became the
major economic power at the onset of the First World War.‡ The ranks of the other major
leading countries remained quite stable: Austria-Hungary is ranked third in our sample while
it ranked fourth after 1877, Switzerland remains its position within all time periods and
Belgium changed its position with Sweden in the subsample 1877-1899, but both remained
within the seven leading countries. Russia lost four ranks between 1843 and 1913, which
reflects the growing economic problems within the Tsarist Empire, while Italy and Denmark
could both improve its relative positions.
[Insert TABLE 6 here]
6. Technological specialization and clusters
In this section, we identify technological clusters and technological specialization within
countries and regions. Our dataset includes patents from 86 different technological classes
with an average number of 16.8 patents per class. The median number of patents per class is
12.0, indicating a distribution that is skewed to the left. At the top, we mainly observe
* C. Hoag, ‘The Atlantic Telegraph Cable and Capital Market Information Flows’, Journal of Economic History 66 (2006); Bordo M. D., Taylor A. M. and Williamson J. G. (eds.), Globalization in historical perspective, A National Bureau of Economic Research conference report (Chicago: Univ. of Chicago Press, 2003).
† In the United States, the number of domestic patent applications rose only slightly during the 1870s compared to later periods, cf. J. Schmookler, ‘The Level of Inventive Activity’, The Review of Economics and Statistics 36 (1954), 183–90, at 186 (Table 1).
‡ Data about foreign patenting in Spain supports this argument. Patricio Sáiz observes a relative decline of French patenting in Spain, while the share of patents held by patentees from the United States rose remarkably between 1820 and 1879; P. Saiz, ‘Social Networks of Innovation in the European Periphery: Exploring Independent versus Corporate Patents in Spain circa 1820-1939’, Historical Social Research / Historische Sozialforschung 37 (2012), 348–69, at 357.
17
technological classes that are related to the construction and improvement of locomotives and
railway wagons, reflecting one of the leading sector of industrialization in Germany.*
The technological diversification of a country is dependent on the total number of patents
granted, as FIGURE 3 suggests. We computed the HHI for the concentration of technologies
within each country based on the number of patents within one technological class in relation
to the total number of patents that originated from this country. A HHI equal to one indicates
that all patents originating from a country are assigned to one single technological class, while
a HHI of zero implies a uniform distribution of patents across technological classes. We use
the same territorial definition as in section 5 so that we treat the regions within Prussia as well
as Alsace-Lorraine as separate countries. Furthermore, we include only territories for which
we observe at least 20 patents to ensure some variation with regard to technologies. The
empirical result is straightforward: concentration decreases with the absolute number of
patents in our dataset, or, in other words, larger territorial entities are typically more
diversified than others. In the following, we restrict our analysis to these leading countries.
[Insert FIGURE 3 here]
In the preceding section we argued that innovative activity within regions may have been a
result of the (exogenous) specialization in technologies related to the leading sectors of the
actual phase of industrialization and the existence of clusters in which knowledge spillovers
can take place.† For the period of 1843-1877 we can discuss this hypothesis in more depth. In
doing so, we compute an index of revealed technological advantage (RTA) for all territories
included in FIGURE 3.‡ Furthermore, we focus on the most frequent technological classes,
including at least 20 patent observations, which are grouped in four clusters: 1. Railways,
including the classes “steam boilers”, “railway operations” and “firing installations”; 2. Power
machines including the technology classes “steam engines”, “combustion engines” and
“machine parts”; 3. Textile-related technologies consisting of the classes “textile processing”,
“sewing and embroidery”, “spinning mills” and “weaving mills”. 4. Technologies related to
agriculture including the classes “alcoholic drinks”, “agricultural equipment”, “flour mills”,
and “tobacco”. The former three of these clusters represent technologies related to the leading
* Fremdling, ‘Railroads and German’.† Degner and Streb, Foreign patenting; Streb, Baten and Yin, ‘Technological knowledge spillover’.‡ For this approach see also Degner and Streb, Foreign patenting and J. Cantwell and S. Iammarino,
Multinational corporations and European regional systems of innovation, Studies in global competition (London, New York: Routledge, 2003), v. 18.
18
sectors of the first phase of the industrial revolution in Germany.* The latter cluster represents
technologies related to rather traditional industries.
As we have argued above, foreign patents tend to be considerably more valuable than
domestic patents. We consequently exclude the latter to avoid biased results. The RTA for
class c and country i is defined in the following way:
RTAci=
pci
pi
pc
p
(1)
The ratio pci/pi represents the number of patents in class c of country i relative to the total
number of patents from country i, and pc/p represents the number of patents in class c relative
to the total number of patents, excluding all patents related to domestic patentees.
An index of RTAci larger (smaller) than one thus indicates that country i has – compared to
other countries – a disproportionately high (low) share in technological class c. Given this
feature of the RTA, we define a country as specialized in a technological class if its RTAic is
among the three highest. Furthermore, a country commands over a technological cluster if it is
specialized in at least two technological classes of the same technological group defined
above. TABLE 7 gives an overview of technological specialization. We report the number of
patents relative to the mean population of the respective territorial unit in column two and the
leading technological classes including the index of RTA in brackets in column three. The
technological clusters are identified in the last column.
[Insert TABLE 7 here]
As TABLE 7 shows, we identify technological clusters in railways for the Prussian provinces
of Saxony, Rhineland and Westphalia as well as Hanover. The Rhineland and Westphalia also
exhibits a cluster in power engines, reflected by a very high RTA in combustion engines (4.7).
* Fremdling, ‘Railroads and German’. Although the textile sector played an important role for Germany’s industrialization, scholars agree that it does less so than the railway sector. Cf.: G. Kirchhain, ‘Das Wachstum der deutschen Baumwollindustrie im 19. Jahrhundert: Eine historische Modellstudie zur empirischen Wachstumsforschung’, Münster, Univ., Diss., 1971 (1973) and K. Ditt, ‘Vorreiter und Nachzügler in der Textilindustrie. Das Vereinigte Königreich und Deutschland während des 19. Jahrhunderts im Vergleich’, in H. Berghoff and D. Ziegler (eds.), Pionier und Nachzügler?: Vergleichende Studien zur Geschichte Großbritanniens und Deutschlands im Zeitalter der Industrialisierung ; Festschrift für Sidney Pollard zum 70. Geburtstag, Veröffentlichung / Arbeitskreis Deutsche England-Forschung, 2. unveränd. Aufl. (Bochum: Brockmeyer, 1996), pp. 29–58.
19
A cluster in power engines is also identified for Austria-Hungary. However, we have to point
out that the relative number of patents was low given the large population.
Except of Austria-Hungary and the United States, all foreign states were specialized in at least
one technological class related to textiles, one of the leading sectors of the first Industrial
Revolution. In particular, we observe textile clusters in Baden’s neighboring regions. For
spinning mills we compute a RTA of 4.2 in Alsace-Lorraine and 3.0 in Switzerland, and for
weaving mills 2.6 and 3.7, respectively. There is strong evidence that the high share of textile
related patents from Alsace-Lorraine and Switzerland was driven by the Zollverein’s trade
policy that set strong incentives for patent protection within Baden. The textile sector was by
far the biggest industrial sector in Baden employing more than 50 percent of the industrial
workforce,* and there existed strong interlinkages with the neighboring regions.† Indeed, after
Baden joined the Zollverein in 1836, Swiss and Alsatian entrepreneurs founded companies
over there and shifted their production into the country in order to circumvent the newly
erected tariff barriers and to secure access to the German market. The dominance of inventors
from Switzerland and the Alsace in textile-related technology classes reflects this pattern and
suggests that Swiss and Alsatian entrepreneurs aimed to protect their technological lead by
applying for patent protection in Baden.
TABLE 7 also points to the existence of clusters in technologies related to the processing of
agricultural goods in Alsace-Lorraine, Hesse-Darmstadt, the Prussian province of Hesse-
Nassau, and Wuerttemberg. We explain this pattern by the structure of agriculture in these
countries. South-West Germany and the Upper Rhine region in particular were characterized
by the cultivation of special crops like wine and tobacco. As a result, we observe a relatively
strong patenting activity in the related technological classes. For Hesse-Darmstadt, for
example, a regional specialization in the processing of tobacco is indicated by a remarkably
high RTA of 14.3 in the class “tobacco”. Inventors from the neighboring states had a strong
incentive to apply for patent protection in Baden since there was both a relatively large market
for these products in Baden and the risk of competition. This argument is supported by
employment data revealing the growing importance of foodstuff industries in Baden, which
made imitation in the related technological fields very likely.‡
* See: Fischer, Staat, p. 309 and Großherzogtum Baden, ‘Die gewerblichen Unternehmungen mit 10 und mehr Arbeitern’, Statistische Mitteilungen über das Land Baden (1875), 73–80.
† Ploeckl, ‘The internal impact’, 400; D. Eusterbrock, Industrielle Entwicklung und Integration im südlichen Oberrheingebiet: (Oberbaden - Oberelsaß) 1740 - 1966 (1968), pp. 55–7.
‡ The share of workers in the foodstuff industry rose from 1,910 workers in the modern, factory liked organized sector or 7.5 percent in 1849, to 10,437 (11.7 %) in 1861 and 14,460 (20.8 %) in 1874. See: Fischer, Staat, p. 309; Dietz, Gewerbe; Großherzogtum Baden, ‘Gewerbliche Unternehmungen’.
20
Our data suggests a strong spatial pattern of technological clusters. The Western and Northern
regions of Germany had technological clusters related to the railway sector and power
engines, southern economies specialized in foodstuffs. While the former represents the
booming ‘high-tech’ sectors in this period, the latter are associated with traditional industries
from the pre-industrial period. We therefore argue that the Western and Northern regions of
Germany profited from a technological advantage over the south resulting in an earlier take
off of the local economy. It is also striking that German regions did not only specialize to a
large extend in foodstuffs but also in other more traditional technologies like glass production
or pit and quarry industries. In total, our data suggests that the specialization of German
regions in technologies related to the industries of the first industrial revolution was
surprisingly weak. This argument is even stronger if one considers that there is no evidence
for a regional specialization in textile-related innovations within German states and that, given
the number of patents per million inhabitants, only the Prussian provinces of Saxony and
Rhineland and Westphalia commanded over strong technological clusters related to the
leading sector of the industrial revolution.
Since these two regions produced a relatively high number of patents per million inhabitants
one might conclude that a strong technological cluster related to the leading sector of the
Industrial Revolution in Germany is a good predictor for a region’s innovativeness. Yet, as
TABLE 7 shows, clustering in agriculture related technologies correlates with even higher
values of patents per million inhabitants in the two Hessian territories and Wuertemberg.
While the latter may in part be driven by close vicinity to Baden, this cannot be a valid
explanation for the Kingdom of Saxony and the Prussian mainland where per capita values
were also relatively high but no technological clusters existed. There is thus no strong
convincing evidence for a causal link between specializations in technological clusters related
to the leading sector of industrialization.
7. How technology transfer affected innovation in Baden
In Baden, the number of patents granted to non-domestic inventors was considerable higher
than the number of patents granted to domestic inventors. Only 19.8 percent of all patents in
our dataset represent the latter. Baden was thus a major recipient of foreign technology. In
theory, this should have generated positive spillover effects and fostered innovative activity
by the application of foreign technologies – learning by doing – and the exploitation of these
technologies by local entrepreneurs after patent protection had expired. However, as Sydney
21
Pollard has pointed out, this is only possible if the receiving country commands over a
significant share of skilled technicians and a sufficiently skilled workforce that is able to
imitate a foreign technology from its blueprint or working model.* Yet, if a country lacks such
a skilled workforce, actual technology transfer is linked to the transfer of skilled labor and
foreign patenting does not translate into positive spillover effects. It may even have a negative
effect on the local research economy. This will be the case, if foreigners introduce a
technology or its resulting finished products to the local research economy that are superior to
technologies developed by domestic inventors making the latter worthless while the former
cannot be copied. In this section we investigate which of these two effects have prevailed in
Baden between 1843 and 1877.
First, domestic patenting in Baden shows a very different technological pattern in comparison
with patents granted to foreigners. Based on the shares of patents within a technological class
relative to all patents granted to inventors from each groups, we observe an overall correlation
of 0.8 between German states and other countries. By contrast, the correlation between Baden
and German states and Baden and foreign countries is 0.5, respectively. This pattern is also
illustrated in TABLE 8, which compares the rank of the technologies of the three groups of
countries. For simplification, we only report the ten most frequent technologies.
[Insert TABLE 8 here]
Inventors in Baden were especially innovative in the technological classes ‘agricultural
equipment’ and ‘beer, wine and alcohol’, which accounted both for 5.4 percent of all domestic
patent grants respectively. Together with “flour mills”, ranked tenth, agriculture was the
dominant technological cluster in Baden making up to 13.3. A high share of domestic
inventions is also related to pumps. Although we treat this class not as part of the agricultural
cluster, we can argue that pumps were used in agriculture for irrigation so that inventions in
this field could be indirectly affected by the sectoral specialization.
By contrast, inventions related to railways and power engines were underrepresented in
Baden. Likewise, the textile cluster was very small. We observe only the class “sewing and
embroidery” within the ten most frequent classes with a share of 2.9 percent. Worth
mentioning is Baden’s strength in precision engineering. The class “horology” accounts for
* S. Pollard, Peaceful conquest: The industrialization of Europe, 1760 - 1970, Reprint (Oxford: Oxford Univ. Press, 2002), pp. 147–8
22
4.7 percent and reflecting the country’s competitive and innovative watchmaking industry in
the southern Black Forest.*
As columns two and three of TABLE 8 show, the distribution of patents from other German
states and foreign countries differed considerably. Railways and power engines dominated in
the case of German inventors that received patent protection in Baden. Railway related
technologies made up for 15.5 percent of these patents and power machines for another 11.1
percent. Together these two clusters accounted for 26.6 percent within the group of German
patentees out of Baden. These states were thus an important source for technologies related to
German leading sectors.† The agricultural cluster represents 10.4 percent. As we have shown
in section 6, the Southern states were specialized in this sector. Therefore, we see a quite
similar pattern like in Baden, if we take the regional factor into account. By contrast,
innovations related to the textile industry seems to be not only relatively unimportant in
Baden but also in other German states.
The patenting activity of the non-German countries in our data-set was a little more
diversified with 13.3 percent in the railway cluster, 12.4 percent in textile related technologies
and 8.9 percent in the technological cluster power machines.
The pattern described here reveals some support for both hypothesizes presented above.
While there were apparently no spillover effects in the technological groups related to the
leading sectors of Germany’s industrial revolution (railways, power engines and textiles),
such effects existed in foodstuffs related technologies and to a lesser extent in technological
groups related to precision engineering. These spillover effects, however, existed nearly
exclusively between Baden and its neighbors who specialized in foodstuffs related
technologies (cf. TABLE 7).
Since the share of workers in the modern, factory-like part of the textile sector in Baden made
up for 55 percent in the period between 1844 and 1874, the absence of spillover effects in
textile related technology classes is astonishing and suggest that the import of superior
Alsatian and Swiss technologies led to a crowding out effect of technologies originating from
Baden.‡ FIGURE 4 confirms this view. The figure depicts the share of spinning patents in
percent of all patents granted in the Grand-Duchy of Baden in approximately ten-year time * In 1847 the watch-making industry employed 2566 workers; their number rose until 1861 to 4025 but then
stagnated in the following decade (1875: 4550 workers). Compared to the overall number of workers employed in industry the watch-making industry accounted for 5.7 and 4.4 percent in 1847 and 1861, respectively. Due to a significant rise in employment figures and a further diversification of industry during the 1860’s and 1870’s the watch-makings industry’s share plumped to 1.9 percent in 1875. See: Fischer, Staat, p. 306; Dietz, Gewerbe, pp. 23; 28 and Großherzogtum Baden, ‘Ergebnisse der Gewerbeaufnahme vom 1. Dezember 1875’, Statistische Mitteilungen über das Land Baden (1877), 263–8, at 264–5.
† Fremdling, ‘Railroads and German’.‡ Fischer, Staat, p. 309; Dietz, Gewerbe; Großherzogtum Baden, ‘Gewerbliche Unternehmungen’.
23
periods differentiating between the sources of a patent’s origin. While in the time period
1843-1849 all spinning patents originated from Baden or the rest of Germany, their share
collapsed during the 1850’s and further declined during the 1860’s and 1870’s. This loss
during the 1850’s was almost completely compensated by patents from non-German –
especially French and Swiss – inventors. Even when the share of spinning patents declined
during the 1860’s and 1870’s, non-German inventors remained the dominant group in this
technological class. Obviously, German inventors in general and Baden inventors in particular
were not able to match the expertise of the non-German inventors.*
[Insert FIGURE 4 here]
The technologies related to the railway sector, depicted in FIGURE 5, showed a similar
picture. Also in this technological classes, non-German inventors were crowding out
technologies patented by Baden and German inventors; but in contrast to spinning
technologies, German inventors re-gained “market”-share during the 1860’s even overtaking
the share of non-German inventors and although non-German inventors recaptured their
dominated position during the 1870’s, the share of railway patents granted to German
inventors remained constant. Obviously, German inventors successfully acquired the skills
and knowledge to successfully imitate railway technologies as well as to develop new
innovations on their own. According to Rainer Fremdling, Prussian entrepreneurs succeeded
in substituting foreign rails and railway equipment through German products around the
middle of the 19th century implying a successful transfer of state-of-the-art technologies.†
Yet, given our data, this process was limited to the Rhineland and Westphalia and to a lesser
extent to the Prussian provinces of Saxony and Hannover. Only a small number of railway-
related patents originated from Baden, in particular in the last years of our sample. This is
somehow surprising given the early starting point of railway production in Baden. The first
locomotive was constructed in 1843 – much earlier than in most other regions of Germany.‡
Until the 1860s, the Maschinenbaugesellschaft in Karlsruhe remained one of the leading
locomotive factories among Germany states. However, competitors, in particular from
Prussia, cached-up fast and overtook the Maschinenbaugesellschaft in the 1870s. The relative
decline of locomotive production in comparison with other German states is reflected in our
patent dataset.
* This interpretation is confirmed by Ditt, Vorreiter und Nachzügler, pp. 39–40.† Fremdling, ‘Railroads and German’.‡ Kiesewetter, Industrielle Revolution in, p. 206.
24
[Insert FIGURE 5 here]
Against the background of Baden’s employment structure, these different responses of
domestic inventors to the diffusion of technologies related to textiles, railways, power engines
and foodstuffs appear to be reasonable. Around 1844, between 35 and 42 percent of the
working population was employed in agriculture while only 4.9 percent were employed in the
modern-factory-like industrial sector.* There was thus a much higher creative potential to
absorb, imitate and develop technologies related to agriculture. The example of Baden is thus
a strong case for Pollards argument that technology transfer can only work if the
technological capabilities of the emitting and the receiving country are on the same stage.
The divergent experience of technology transfer in railway and textile related technologies,
also reminds us to treat the argument of the benefits of tariffs protecting nascent industries
with caution.† Although the German Customs Union introduced an educational tariff scheme
for iron and steel related products as well as for textiles, import substitution only took place in
the case of the former and only in some German regions.‡ Favorable local conditions, like a
sufficiently skilled workforce, risk-taking entrepreneurs, access to cheap finance and natural
resources as well as institutional factors, were thus equally important for a successful late-
development. In which ways these factors interacted is still not yet sufficiently explored. In
this respect, more comparative studies of regional differences in the phase of Germany’s early
industrialization will prove fruitful.
8. Conclusion
In this paper we introduce a new data-set of patents granted in Baden during the period 1843-
1877. Our data shows that already in the second quarter of the 19th century innovative activity
was concentrated in a small number of research economies. These represent mainly the same
regions and countries that had been identified as highly innovative in the last quarter of the
* Between 36.9 and 47.3 percent of the workforce was employed in the traditional craft-industries. See: Fischer, Staat, pp. 297–8. Fischer’s estimates are based on reports of the tax administration (Steuerdirektion) and the Ministry of Finance. Because the latter excludes the major part of unskilled laborers form its published data, the two statistics yield different employment shares.
† The argument of protecting nascent industries with an educational tariff (Erziehungszoll) was prominently brought forward by F. List, Das nationale System der politischen Ökonomie: Volksausgabe auf Grund der Ausgabe letzter Hand- und Randnotizen in Lists Handexemplar (Basel: Kyklos-Verl. {[u.a.], 1959), pp. 273–8.
‡ In both cases tariffs on raw products were small or did not exist at all, while intermediary and final products were taxed increasingly. For an overview see: H.-W. Hahn, Geschichte des Deutschen Zollvereins, Kleine Vandenhoeck-Reihe (Göttingen: Vandenhoeck & Ruprecht, 1984), vol. 1502. W. O. Henderson, The Zollverein (London: Cass, 1984).
25
19th century and the early 20th century. Yet, our data suggests that the seminal rise of the
United States as a leading global research economy did take place during the 1870’s. Since
the number of domestic patents within the United States was already high during mid-century,
the timing of the US rise in the German data suggests that the latter was a result of falling
information costs due to the communication revolution. Distance related transaction costs thus
played a role in an inventor’s decision to apply for patent protection in Baden. This finding is
supported by the fact that southern German regions are overrepresented in our data-set
compared to their population figures. In the case of non-German countries there is also
evidence that the erection of tariff barriers constituted a positive incentive to apply for patent
protection in Germany states.
On the other hand, we demonstrate that German regions did not predominantly specialize in
technologies related to the first phase of the industrial revolution. No German region had a
distinct specialization in technologies related to the textile sector; and only the Prussian
provinces of Saxony and Rhineland and Westphalia commanded over a strong technological
cluster related to the railway sector and power engines. The remaining (southern) German
regions specialized mainly in technologies related to food-processing and, to a lesser extent,
in other traditional technologies. Nevertheless, also the regions specialized in food-processing
here and there commanded over a specialization in a modern technology class foreshadowing
Germany’s rise to a global leading research economy. Yet, our data suggests that this rise was
far from clear in the 1870’s and that technological clustering in the phase of early
industrialization may not explain long term regional innovativeness sufficiently.
At last, our data allows studying the effects of technology diffusion on a local research
economy. Our results are divided. We find evidence that there were regional spillover effects
between Baden and its southern neighbors in technologies related to food-processing; but no
spillovers in the technologies related to the industries of the first industrial revolution. In the
case of spinning patents, we can actually observe the crowding out of domestic inventions
through Alsatian and Swiss inventors. The same was true for other German regions. Yet, in
contrast to the textile sector, German regions successfully adopted foreign state-of-the-art
technologies in the case of the railway sector. These regional differences suggest that a further
spatial comparative analysis of the early phase of the industrial Revolution in Germany will
be fruitful. In particular one may ask if differences in patent stipulations can explain
differences in regional innovativeness. The analysis of the Baden patent dataset furthermore
points to a strong spatial pattern of technology transfer within Germany and Europe that
deserves to be investigated in more depth.
26
27
Tables
TABLE 1: PATENTS GRANTED IN GERMAN STATES, 1841-1877
Average number per year, 1841-1877absolute per million inhabitants
Saxony 138.5 63.7Wuerttemberg 70.6 40.5Baden 39.7 28.5Bavaria 95.8 20.5Prussia 89.4 4.6Source: total number of patents: Kurz, Weltgeschichte des Erfindungsschutzes, p. 346; population figures: Franzmann, Bevölkerung des Deutschen Reichs.
28
TABLE 2: PATENTS GRANTED IN THE STATE OF BADEN, 1843-1877
New Extensions Total
Patentee absolute in % absolute in % absolute in %
I. Inventor:
Original inventor 1,405 96.3 118 94.4 1,523 96.1
Not original inventor 54 3.7 7 5.6 61 3.9
Total 1,459 100.0 125 100.0 1,584 100.0
II. Type of patentee:
Single individual 1,239 84.9 112 89.6 1,351 85.3
Private partnerships 180 12.3 12 9.6 192 12.1
Corporations 40 2.7 1 0.8 41 2.6
Total 1,459 100.0 125 100.0 1,584 100.0
III. Location of patentee:
Baden 281 19.3 33 26.4 314 19.8
German states (ex. Baden) 618 42.4 34 27.2 652 41.2
Other countries 552 37.8 58 46.4 610 38.5
Not available 8 0.5 . . 8 0.5
Total 1,459 100.0 125 100.0 1,584 100.0
German states include all states that were part of the German Empire in 1871, excluding Alsace-Lorraine, which is included in “Other countries”. For a small number of patents it was not possible to identify the patentees’ place of residences accurately.Source: own database.
29
TABLE 3: PATENTS GRANTED TO FOREIGN PATENTEES IN BADEN, 1843-1877
State Province Number of patents
Sharein %
Patents per million
inhabitantsGerman states:
Prussia
Main territory (1) 118 10.2 11.6Rhineland/Westphalia (2) 86 7.5 18.0Hesse-Nassau (3) 53 4.6 40.1Province of Saxony 45 3.9 23.1Hanover (4) 23 2.0 12.5Others (5) 2 0.2 1.9
Wuerttemberg 81 7.0 46.2Bavaria 61 5.3 20.4Saxony 58 5.0 26.4Hesse-Darmstadt 24 2.1 28.2Small German states 58 5.0Sum German states 609 52.8Other countries:
FranceMain territory 187 16.2 5.3Alsace-Lorraine (6) 37 3.2 24.2
UK 78 6.8 2.7Austria-Hungary (7) 72 6.2 2.2USA 51 4.4 1.6Switzerland 50 4.3 19.9Other countries 70 6.1Sum other countries 545 47.2Total 1,154 100.0(1): Provinces of Berlin-Brandenburg, East Prussia, Pomerania, Posen, Silesia and West Prussia; (2) Province of the Rhine and Province of Westphalia; (3) Duchy of Nassau and Electorate of Hesse until 1866; (4) Kingdom of Hannover until 1866; (5) Schleswig-Holstein and Hohenzollern; (6) Alsace-Lorraine became part of the German Empire in 1871; (7) aggregated population based on population of Austria in 1851 (17.5 million) and population in Hungary in 1850 (13.2 million).Source: patents: own database; population of German states and Prussian provinces: Franzmann, Bevölkerung des Deutschen Reichs; population figures of other countries are extracted from Angus Maddison’s database: http://www.ggdc.net/maddison/oriindex.htm.
30
TABLE 4: PATENTING ACTIVITY WITHIN LEADING COUNTRIES, 1843-1877
# of patents
# of places
firstin %
top 3in % HHI
German states:
Prussia
Main territory (1) 118 22 69.6 83.1 0.49
Rhineland/Westphalia (2) 86 40 19.7 39.9 0.08
Hesse-Nassau (3) 53 13 65.6 88.1 0.44
Province of Saxony 45 9 77.8 86.7 0.61
Hannover (4) 23 9 61.7 76.6 0.40
Wuerttemberg 81 22 44.1 67.7 0.23
Bavaria 61 28 33.7 51.0 0.14
Saxony 58 21 27.8 62.6 0.15
Hesse 24 8 47.8 78.3 0.29
Foreign countries:
FranceMain territory 187 42 72.5 77.6 0.53
Alsace-Lorraine (5) 37 13 28.5 62.9 0.17
UK 78 31 43.9 59.1 0.21
Austria-Hungary 72 18 58.6 76.6 0.37
USA 51 20 36.0 56.0 0.17
Switzerland 50 21 29.0 63.0 0.15
(1): Provinces of Berlin-Brandenburg, East Prussia, Pomerania, Posen, Silesia and West Prussia; (2) Province of the Rhine and Province of Westphalia; (3) Duchy of Nassau and Electorate of Hesse until 1866; (4) Kingdom of Hannover until 1866; (5) Alsace-Lorraine became part of the German Empire in 1871; HHI: Herfindahl-Hirschman-Index.Source: own database.
31
TABLE 5: PATENTS GRANTED TO GERMAN PATENTEES IN BADEN AND GERMANY
Baden1843-1877
Germany1877-1899
Germany1900-1913
rank abs. in % rank abs. in % rank abs. in %Prussia, main (1) 1. 118 19.4 2. 1,499 23.4 1. 4,472 29.1Prussia, RHW(2) 2. 86 14.1 1. 1,517 23.7 2. 3,543 23.0Wuerttemberg 3. 81 13.3 7. 224 3.5 6. 603 3.9Bavaria 4. 61 10.0 5. 535 8.4 5. 603 9.0Saxony 5. 58 9.5 3. 784 12.2 3. 1,444 9.4Prussia, HNA(3) 6. 53 8.7 4. 553 8.6 4. 1,441 9.4Prussia, PSA(4) 7. 45 7.4 6. 321 5.0 9. 396 2.6Hesse-Darmstadt 7. 24 3.9 9. 183 2.9 10. 269 1.7
Prussia, HAN(5) 9. 23 3.8 8. 194 3.0 7. 420 2.7Hamburg 10. 19 3.1 10. 174 2.7 8. 412 2.7Others 41 6.7 421 6.6 990 6.4Total 609 100.0 6,405 100.0 15,373 100.0
For reasons of consistency and comparison, we exclude all patents granted to patentees from Baden and Alsace-Lorraine in all columns respectively; (1): Provinces of Berlin-Brandenburg, East Prussia, Pomerania, Posen, Silesia and West Prussia; (2) Province of the Rhine and province of Westphalia; (3) Province of Hesse-Nassau, Duchy of Nassau and Electorate of Hesse until 1866; (4) Province of Saxony; (5) Province of Hannover, Kingdom of Hannover until 1866.Source: Baden: own database; Germany: sample of high-value based on data from Streb, Baten and Yin, ‘Technological knowledge spillover’.
32
TABLE 6: PATENTS GRANTED TO FOREIGN PATENTEES IN BADEN AND GERMANY
Baden1843-1877
Germany1877-1899
Germany1900-1913
rank abs. in % rank abs. in % rank abs. in %France (1) 1. 187 37.9 3. 435 17.3 3. 855 14.3UK 2. 78 15.8 1. 640 25.4 2. 930 15.5Austria-Hungary 3. 72 14.6 4. 316 12.6 4. 709 11.8USA 4. 51 10.3 2. 614 24.4 1. 1,868 31.1Switzerland 5. 50 10.1 5. 156 6.2 5. 638 10.6Belgium 6. 18 3.6 6. 107 4.3 7. 218 3.6Sweden 7. 14 2.8 7. 60 2.4 6. 230 3.8Russia (2) 7. 14 2.8 8. 42 1.7 10. 103 1.7Italy 9. 7 1.4 10. 29 1.2 8. 131 2.2Denmark 10. 5 1.0 9. 31 1.2 9. 117 2.0Others 12 2.4 85 3.4 200 3.3Total 508 100.0 2,515 100.0 5,999 100.0
(1): Excluding Alsace-Lorraine; (2) including Congress Poland.Source: Baden: own database; Germany: sample of high-value based on data from Streb, Baten and Yin, ‘Technological knowledge spillover’.
33
TABLE 7: TECHNOLOGICAL SPECIALIZATION AND CLUSTERS
CountryPatents per million inhabitants
Specialization Technological cluster
Prussia, Saxony 23.1 steam boilers (3.1), railway operations (1.7), firing installations (3.1) Railways
Prussia, Rhineland/Westphalia 18.0 steam boilers (1.8), firing installations (2.3), combustion engines (4.7), machine parts (1.9), chemicals (1.3), weapons (1.3) Railways; power engines
Prussia, Hannover 12.5 steam boilers (1.9), railway operations (1.9), steam engines (2.3), agricultural equipment (1.7), glass production (2.2), instruments (2.3) Railways
Austria 2.2 steam engines (1.5), machine parts (1.9), flour mills (4.2), paper production (2.2) Power engines
Alsace-Lorraine 24.2 Textile processing (2.2), sewing and embroidery (2.0), spinning mills (4.2), weaving mills (2.6), beer, wine and alcohol (2.6), tobacco (1.6), pit and quarry industries (1.9) Textiles; foodstuffs
Switzerland 19.9 railway operations (1.5), steam engines (2.2), textile processing (1.6), spinning mills (3.0), weaving mills (3.7), flour mills (2.0), weapons(4.6) Textiles
Wuerttemberg 46.2 weaving mills (2.4), agricultural equipment (2.1), tobacco (2.2) Foodstuffs
Prussia, Hesse Nassau 40.1 beer, wine and alcohol (2.6), flour mills (1.9), tobacco (2.2) Foodstuffs
Hesse-Darmstadt 28.2 combustion engines (1.5), spinning mills (1.3), beer, wine alcohol (2.2), agricultural equipment (1.7), tobacco (14.3), chemicals (1.3), glass production (2.2) Foodstuffs
Saxony 26.4 Textile processing (2.0), chemicals (1.6), glass production (1.8), paper production (3.1) None
Bavaria 20.4 firing installations (3.2), combustion engines (1.8), beer, wine and alcohol (2.2) None
Prussia, main territory 11.6 sewing and embroidery (2.4), agricultural equipment (1.5), pit and quarry industries (2.0) None
France, main territory 5.3 textile processing (1.9), chemicals (2.2) None
United Kingdom 2.7 machine parts (1.7), chemicals (1.6), glass production (4.0) None
United States 1.6 railway operations (1.7), sewing and embroidery (1.4), tobacco (2.2), weapons (6.7), pit and quarry industries (2.0) None
Index of RTA in parentheses; a table with all RTA-values is included in the appendix (table A.1).
34
TABLE 8: LEADING TECHNOLOGICAL CLASSES BY COUNTRY GROUP
Baden Germany Foreign
Tech-Class in % Tech-Class in % Tech-Class in %
agricultural equipment 5.4 railway operations 6.6 railway operations 7.1
beer, wine and alcohol 5.4 steam boilers 5.1 spinning mills 4.7
horology 4.7 instruments 4.4 chemicals 4.2
pumps 3.6 machine parts 4.1 steam engines 4.0
railway operations 3.6 firing installations 3.8 steam boilers 3.6
sewing and embroidery 2.9 combustion engines 3.7 flour mills 3.5
weapons 2.9 pit and quarry industry 3.4 machine parts 3.4
paper production 2.5 steam engines 3.3 textile-processing 3.3
pit and quarry industry 2.5 sewing and embroidery 2.9 instruments 2.9
flour mills 2.5 beer, wine and alcohol 2.8 weapons 2.9
Sum 36.0 Sum 40.1 Sum 39.6
Source: own database.
35
Figures
FIGURE 1: PATENTS GRANTED IN BADEN BY LOCATION OF PATENTEE
1843
1844
1845
1846
1847
1848
1849
1850
1851
1852
1853
1854
1855
1856
1857
1858
1859
1860
1861
1862
1863
1864
1865
1866
1867
1868
1869
1870
1871
1872
1873
1874
1875
1876
0
20
40
60
80
100
120
140
160
180
200
0
50
100
150
200
250
300
350
400
450
500
Baden German states ex. Baden
Other countries Real net investment, 1850 = 100 (right axis)
Source: patents: own database; real net investment in German states (1913 prices): R. Metz, Histat Datenkompilation: Säkulare Trends der deutschen Wirtschaft: ZA8179 (Datenfile Version 1.0.0).
36
FIGURE 2: PATENTS PER MILLION INHABITANTS AND DISTANCE TO BADEN, 1843-1877
10 100 1,000 10,0000
10
20
30
40
50
60
70
80
Distance in kilometres (logarithmic scale)
Pate
nts p
er m
illio
n in
habi
tant
s
Patents per million inhabitants: total number of patents granted in Baden by location of patentee divided by the mean population of the respective territorial unit (1843-1877). Distance is measured as the distance between the capital city of each territorial unit and Karlsruhe, which was the capital city of Baden. The size of the bubbles reflect the absolute number of patents.Source: patents: own database; population of German states and Prussian provinces: Franzmann, Bevölkerung des Deutschen Reichs; population of foreign countries from Angus Maddison’s database: http://www.ggdc.net/maddison/oriindex.htm.
37
FIGURE 3: TECHNOLOGICAL DIVERSIFICATION OF LEADING COUNTRIES, 1843-1877
0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.1 0.110
20
40
60
80
100
120
140
160
180
200
HHI of technological diversification
Num
ber o
f pat
ents
Number of patents: total number of patents granted in Baden by location of patentee divided by the mean population of the respective territorial unit (1843-1877). HHI of technological diversification: concentration of technologies within each territorial unit based on the number of patents within one technological class in relation to the total number of patents that originated from this territorial unit.Source: own database.
38
FIGURE 4: SHARE OF SPINNING PATENTS BY PATENTEE AND TIME PERIOD
1843-49 1850-59 1860-69 1870-770%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Baden German states Other countriesShare of patents that we assigned to the technological classes ‘spinning mills’ relative to the total number of patents granted in Baden in the respective period.Source: own database.
39
FIGURE 5: SHARE OF RAILWAY PATENTS BY PATENTEE AND TIME PERIOD
1843-49 1850-59 1860-69 1870-770%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Baden German states Other countries
Share of railway patents relative to the total number of patents granted in Baden in the respective period. Railway patents include all patents that we assigned to the technological classes ‘railway operations’, ‘steam boilers’ and ‘firing installations’.Source: own database.
40
Appendix
TABLE A.1 reports the index of revealed technological advantage for technological classes with at least 20 patent observations for the leading countries. The numbers in brackets indicate the number of the technological class according to the classification scheme used by the Imperial Patent Office after 1877. As described in section 5, we split up Prussia in different territorial entities and treat these entities like independent state. We do the same for Alsace-Lorraine. In order to avoid biased results we excluded all patents from domestic patentees, which means patents owned by people or firms located in the state of Baden. The grey-shadowed cells indicate the territorial entities with the highest RTA for each technological class. Due to the lack of space, we use the following abbreviations: Bavaria (BAV), Hesse-Darmstadt (HES), Prussian mainland (PRM), Hannover (HAN), Hesse-Nassau (HNA), Prussian Province of Saxony (PSA), Rhineland and Westphalia (RHW), Kingdom of Saxony (SAX), Wuerttemberg (WUE), Austria-Hungary (AUS), France main territory (FRM), Alsace-Lorraine (ALS), Switzerland (SWI), United Kingdom (UK) and United States (USA).
41
TABLE A.1: COMPARATIVE TECHNOLOGICAL ADVANTAGES, 1843-1877German states Foreign countries
Prussia France
Technological groups BAV HES PRM HAN HNA PSA RHW SAX WUE AUS FRM ALS SWI UK USA
Railway sector
(13) steam boilers 1.1 . 1.0 1.9 0.8 3.1 1.8 1.5 0.3 1.3 1.0 . 0.9 0.6 0.9
(20) railway operations 1.4 0.6 1.3 1.9 0.8 1.7 0.9 0.2 0.2 1.4 0.5 . 1.5 1.3 1.7
(24) firing installations 3.2 . 0.6 1.4 0.6 3.1 2.3 . 0.9 1.8 0.2 1.8 0.7 0.8 0.6
Power engines
(14) steam engines 1.3 . 0.5 2.3 0.5 0.6 1.3 0.5 1.1 1.5 0.9 0.8 2.2 0.7 1.1
(46) combustion engines 1.8 1.5 0.3 0.8 1.4 . 4.7 0.3 1.0 1.0 0.9 . 0.7 0.5 .
(47) machine parts 0.4 1.1 1.4 1.1 1.5 2.5 1.9 0.5 . 1.9 0.4 0.8 0.5 1.7 0.5
Textiles
(8) textile processing . . 1.0 . 1.5 . 0.5 2.0 0.5 1.1 1.9 2.2 1.6 1.5 .
(52) sewing and embroidery . . 2.4 . . 0.8 . 1.2 . 0.5 0.4 2.0 0.7 0.9 1.4
(76) spinning mills 1.0 1.3 0.5 . . . 0.7 1.0 0.8 0.8 1.1 4.2 3.0 1.2 0.6
(86) weaving mills 1.5 . 2.0 2.0 . . 1.1 1.6 2.4 . 0.7 2.6 3.7 1.2 .
Foodstuffs, drinks and tobacco
(6) beer, wine and alcohol 2.2 3.8 1.6 . 2.6 . 1.1 0.8 1.2 1.9 0.2 2.6 . 0.6 .
42
(45) agricultural equipment . 1.7 1.5 1.7 0.8 . 0.5 0.7 2.1 0.6 1.3 . . 1.3 .
(50) flour mills 0.5 . 0.6 . 1.9 . 1.2 1.7 0.9 4.2 0.2 0.9 2.0 0.9 .
(79) tobacco . 14.3 0.5 . 2.2 . . 1.0 2.2 . 0.6 1.6 . . 2.2
Other important groups
(12) chemicals . 1.3 1.1 . 0.6 . 1.3 1.6 . . 2.2 0.9 0.6 1.6 0.6
(26) glas production 0.8 2.2 . 2.2 1.0 . . 1.8 0.7 . . . . 4.0 .
(42) instruments 0.4 1.1 1.6 2.3 2.5 3.7 0.3 1.4 0.3 1.9 0.6 0.7 . 0.3 1.0
(55) paper production 0.7 . 0.6 . 0.9 . . 3.1 3.6 2.2 1.0 . 0.9 1.8 .
(72) weapons . . 0.5 . 1.1 . 1.3 . . . 0.9 . 4.6 . 6.7
(80) pit and quarry industries 1.6 1.4 2.0 1.4 0.6 . . 1.7 1.8 . 0.5 1.9 0.7 1.3 2.0
43
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