Comparative Productivity in British and German Industry 1907–37

Using data on physical output per worker for twenty-three industries, it is shown that contrary to popular belief, German industry had not forged ahead of Britain by the 1930s. The pattern of Britain's comparative advantage is reflected in the fact that, although German productivity was substantially higher in heavy industry, British productivity was above German levels in light industry. Relative plant size is shown to be the most important approximate determinant of German/U.K. productivity levels. It is argued that cartelization was important in explaining the failure of Britain and Germany to close the productivity gap with the United States.