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Spoils of War: The Economic Consequences of the Great War in Central Europe

Periodic Reporting for period 2 - SpoilsofWAR (Spoils of War: The Economic Consequences of the Great War in Central Europe)

Reporting period: 2020-07-01 to 2021-12-31

SpoilsofWAR was inspired by the centennial anniversary of the end of World War I and the disintegration of the Habsburg Empire. The dual monarchy of Austria-Hungary has been described by generations of historians as the blueprint European customs union, the ‘centripetal force’ that kept the ultimate ‘ethnic tinderbox’ of nineteenth-century Europe together. The disintegration of the empire decreed by the peace treaties after 1918 has long been blamed for the economic troubles of Central Europe, but these legacies were not subject to sufficient examination, nor were they systematically distinguished from the economic consequences of the war itself. SpoilsofWAR aims to fill this knowledge gap. The world wars had a transformational impact on global economic development. We have seen new research in quantitative economic history on these legacies, but this literature focused almost exclusively on World War II. Extending this direction back to the Great War was long overdue. There is an economic history of World War I, but it paid little attention to post-war economic development. Historians highlighted the economic consequences of the peace more than the economic consequences of the war. The spirit of Keynes also lived on in the macroeconomic approach that largely ignored the deeper spatial and structural transformations that occurred in the warring and post-war economies. These transformations are at the heart of our empirical strategy.

SpoilsofWAR investigates how the Great War affected regional economic development and industrial concentration in the Habsburg Empire and its main successor states. It transcends the boundaries between economic and business history and integrates the analytical tools of both disciplines. We use historical censuses to identify the spatial distribution of industrial activity in the Habsburg lands before the Great War. We also reconstruct employment and sales war-induced spending within the war economy by industry and region, using fully comprehensive confidential wartime statistics on army contractors. Subsequently, we build on this information to detect the legacies of the war on the development of national industries and industrial clusters in the successor states, controlling for wartime casualties and post-war border effects. We also use quantitative methods to assess the complex border legacies that the Habsburg Empire and its dissolution created, examining potential legacies of both former imperial borders and border institutions for regional development and market integration in post-war economies. We conduct an in-depth examination into the role that key enterprises and business networks played in the main clusters of modern industry in Austria-Hungary and the role they played in the war economy and in the successor states after 1918. Finally, we trace the evolution of urban real wages and wage structures in the most prominent cities and centres of modern industry in Central Europe over a period that transcends the Great War.
From the start of the project until the end of the second reporting period, SpoilsofWAR has achieved important scientific objectives. We have built a diverse and dynamic team of researchers with complementary language skills, regional specialisms, and analytical know-how bridging the fields of economic history, economic geography and historical political economy. This transnational and interdisciplinary character reflects the aims of our scholarly ambition. Despite the significant obstacles we had to face in travel restrictions and access to libraries and archives since the outbreak of the global pandemic, we have made great progress in digitizing and processing large volumes of statistics from published and archival material collected across countries in Central Europe. We used GIS software to map the spatial concentration of industry across the Habsburg Empire at a very high degree of regional disaggregation and using a detailed industry classification. We have been hard at work in constructing a comprehensive database of industrial military contractors in the Habsburg War economy specifying their operative location, branch of industry, products supplied, total value of deliveries, size and composition of their workforce. We are close to concluding the preparation of two scientific articles and our first monograph investigating different legacies of the Habsburg Empire and its borders in post-war economies in Central Europe. Despite the absence of international conferences for a large part of the past year, we have found opportunities to present the first preliminary results of our investigation.
We are still in the process of completing our key databases and have just begun to submit the first results of our examination for publication. Hence any potential breakthrough is yet to be determined and our contributions to advancing the state of the art must be validated. The three main potential analytical novelties of the project are the following. First, we are the first to make a serious empirical assessment of the complex border legacies left after the dissolved Habsburg Empire in Central Europe. We measure statistically persistent effects of historical borders in postwar trade integration and regional economic development and the legacies of historical institutions in the militarized southern borderlands on the former empire. Second, the existing literature on the economic history of World War I has relied predominantly on national statistics, which disguise structural and spatial transformations. We build databases that will enable us and future researchers to examine the economic consequences of the war at the local and regional level. Third, we transcend the traditional boundaries between quantitative economic history and business history systematically integrating the analytical tools of both disciplines and submitting our research to their top field journals.
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