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Economic nationalism and economic integration: the Austro‐Hungarian Empire in the late nineteenth century

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  • MAX‐STEPHAN SCHULZE
  • NIKOLAUS WOLF
Abstract
This paper seeks to reconcile two seemingly contradictory strands in the literature on economic development in the late nineteenth century Habsburg Empire - one emphasizing the centrifugal impact of rising intra-empire of nationalism, the other stressing significant improvements in market integration across the empire. We argue that the process of market integration was systematically asymmetric, shaped by intensifying intra-empire nationality conflicts. While grain markets in Austria-Hungary became overall more integrated over time, they also became systematically biased: regions with a similar ethno-linguistic composition of their population came to display significantly smaller price gaps between each other than regions with different compositions. The emergence and persistence of this differential integration cannot be explained by changes in infrastructure and transport costs, simple geographical features or asymmetric integration with neighbouring regions abroad. Instead, differential integration along ethno-linguistic lines was driven by the formation of ethno-linguistic networks. Finally, the analysis shows that the emerging pre-war regional integration patterns – shaped by nationalist sentiment – effectively anticipated the post-war settlement: the fault lines along which the Habsburg Empire was to break up eventually are evident in the price data about a quarter of a century or so before the outbreak of the First World War.
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  • Max‐Stephan Schulze & Nikolaus Wolf, 2012. "Economic nationalism and economic integration: the Austro‐Hungarian Empire in the late nineteenth century," Economic History Review, Economic History Society, vol. 65(2), pages 652-673, May.
    • Handle: RePEc:bla:ehsrev:v:65:y:2012:i:2:p:652-673
    DOI: j.1468-0289.2010.00587.x
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    3. Erfurth, Philipp Emanuel, 2022. "Is the European Union More Unequal Than the Habsburg Empire? Examining Regional Inequalities in Habsburg Regions From 1870 to 2018," SocArXiv 86p27, Center for Open Science.
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    5. Sascha O. Becker & Katrin Boeckh & Christa Hainz & Ludger Woessmann, 2016. "The Empire Is Dead, Long Live the Empire! Long‐Run Persistence of Trust and Corruption in the Bureaucracy," Economic Journal, Royal Economic Society, vol. 126(590), pages 40-74, February.
    6. Timini, Jacopo, 2023. "Revisiting the ‘Cobden-Chevalier network’ trade and welfare effects," Explorations in Economic History, Elsevier, vol. 89(C).
    7. Kukić, Leonard, 2023. "The last Yugoslavs: Ethnic diversity and national identity," Explorations in Economic History, Elsevier, vol. 88(C).
    8. Walker, Sarah, 2018. "Cultural barriers to market integration: Evidence from 19th century Austria," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1122-1145.
    9. Müller Uwe, 2018. "East Central Europe in the First Globalization (1850-1914)," Studia Historiae Oeconomicae, Sciendo, vol. 36(1), pages 71-90, December.
    10. Ciccarelli, Carlo & Missiaia, Anna, 2014. "Business fluctuations in Imperial Austria's regions, 1867-1913: new evidence," LSE Research Online Documents on Economics 55963, London School of Economics and Political Science, LSE Library.
    11. Ivan Roussev, 2020. "National Market before the National State: Was There a Bulgarian National Market before the Liberation of 1878?," Proceedings of the Centre for Economic History Research, Centre for Economic History Research, vol. 5, pages 68-91, November.
    12. Ferdinand Rauch & Matthias Beestermoller, 2014. "A Dissection of Trading Capital: Cultural persistence of trade in the aftermath of the fall of the Iron Curtain," Economics Series Working Papers 718, University of Oxford, Department of Economics.
    13. Martí-Henneberg, Jordi, 2017. "The influence of the railway network on territorial integration in Europe (1870–1950)," Journal of Transport Geography, Elsevier, vol. 62(C), pages 160-171.
    14. Kouli, Yaman & König, Jörg, 2021. "Measuring European economic integration 1880 - 1913: A new approach," DICE Discussion Papers 374, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    15. Matthias Morys, 2022. "Has Eastern Europe Always Lagged Behind the West? Historical Evidence from Pre‐1870," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(S1), pages 3-21, April.
    16. Gerald Hubmann & Clemens Jobst & Michaela Maier, 2020. "A new long-run consumer price index for Austria (1800–2018)," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3/20, pages 61-88.
    17. Carlo Ciccarelli & Anna Missiaia, 2018. "The fall and rise of business cycle co-movements in Imperial Austria’s regions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 60(1), pages 171-193, January.
    18. CERMEÑO, Alexandra L. & SANTIAGO-Caballero, Carlos, 2023. "Closing the price gap - Von Thünen applied to wheat markets in 18th century Spain," CEI Working Paper Series 2023-01, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.

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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913

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