The legacy of Fortress Europe: evidence on trade diversion from Nazi Germany’s confidential wartime foreign trade statistics

"The paper investigates trade diversion caused by the political reorganisation of Europe under Nazi occupation during World War II and its impact on the development of West German foreign trade after 1950. The confidential trade statistics of the Third Reich report data on both the geographical and commodity structure of German exports and imports that can be directly compared with interwar and post-war patterns. I test simple models of trade diversion for both the interwar and war years and determine econometrically to what extent and for how long pre-existing patterns of trade shaped the regional distribution of West German exports and imports during the 1950s and 1960s. In the early 1940s, the German economy became more eastward oriented with the eastward expansion of the Third Reich and the eastbound thrust of the German war effort. However, the legacy of Fortress Europe was short lived, as interwar trade patterns were by and large restored until the mid-1950s. The establishment of the EEC marked a new structural break in West German trade expansion. In appendix, I report a new constant-price dataset on the commodity structure of German/West German exports and imports between 1928 and 1970."