In the latter part of the 1800s, this was further driven by agricultural surplus that enabled a migratory surge of the populace from rural to urban areas. By 1900s, the economic landscape has been positive. According to Marshall Dill, between 1871 and 1910, Germanys population increased tremendously, which - in itself - is an indicator of industrial growth (156). This is supported by Berghahn who explained that "the relative prosperity of the German national economy stemmed from the manner by which additional millions of people that the population explosion of the late nineteenth century had produced were overwhelmingly absorbed by the kabob market without a decline in living standards" (1).
This period marked the transition of the German economy from primarily agricultural to industrial as the labor force. By 1913, the share of agriculture to the gross national product fell to less than 25 percent of the gross national product (Berghahn, 1). Interestingly, the agricultural sector has been seen as a drag to the growth and industrialization of the German economy during these periods because it competed for the labor force and policy decisions (Lains and Pinilla, 178).
The transition is recognized as a major structural change that finally made the German economy efficient and achieving a comparative advantage over other economies in Europe. Impact of War Weighed down by war reparation obligations in the aftermath of the First World War, the German economy stagnated before 1933. There was a massive unemployment rate and economic uncertainty. When the Nazi Germany took the reins of governance, the economy took off. This is because of the war that was eventually waged. First, Adolf Hitler had the power to subsidize industries that would support his war efforts.
Secondly, there was negligible unemployment rate because the labor force was integrated into the army. The economic policy during this period followed the Keynesian economics that was later modified to advance the Nazi policy of discouraging trade with other countries that are not allied with Germany or, at least, excluded in the German sphere of influence (DeLong 1997). The Nazi policy also aimed to make southern Europe highly dependent on Germany and this objective dictated its aggressive expansion and economic policies that undermined the regions economic development.
During the war, the economy was not prioritized and was considered second only to the German war production industry. After Nazi Germany was defeated, the country was devastated.
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