Railroads and German Economic Growth: A Leading Sector Analysis with a Comparison to the United States and Great Britain

The aim of this article is to investigate the railroads' contribution to German economic growth from the 1840s to the 1870s. The analysis focuses on background linkage effects. It is shown that the emergence of the modern German iron industry was due to the railroads' demand for iron products. A comparison with the United States reveals the considerably greater importance of German railroad construction for its domestic iron industry from 1840 to 1860. The British iron industry not only profited from domestic railroad construction but benefited significantly from railroad construction abroad, a fact too often neglected.