A PROJECT REPORT ON

TRENDS IN ECONOMIC DEVELOPMENT OF A DEVELOPED

NATION
SUBMITTED
TO THE UNIVERSITY OF MUMBAI
AS A PARTIAL REQUIREMENT FOR COMPLETING THE
DEGREE OF
M.COM (ACCOUNTS) SEMESTER I
SUBJECT:
ECONOMICS
SUBMITTED BY: JOHNSON ALBERT ISAAC
ROLL NO: 52

UNDER THE GUIDANCE OF

Prof. Shreya Nagda

SIES COLLEGE OF COMMERCE AND ECONOMICS,

PLOT NO. 71/72, SION MATUNGA ESTATE
T.V. CHIDAMBARAM MARG,
SION (EAST), MUMBAI 400022.

CERTIFICATE
This is to certify that Johnson Albert Isaac of M.Com (Accounts)
Semester I (academic year 2015-2016) has successfully completed the
project on
______________________________________________________under the
Guidance of Prof. Shreya Nagda

_________________

___________________

Prof. Shreya Nagda

Payal Samwani

___________________

___________________

(External Examiner)

Dr. Kinnarry Thakkar

Place: _____________Date: ___________

DECLARATION

I, Johnson Albert Isaac Student M.Com (Accounts) Semester I

(academic year 2015-16) hereby declare that, I have completed the
project on
______________________________________________________________.
The information presented in this project is true and original to
the best of my knowledge.

Johnson Albert Isaac

(Student Name & Sign)
Roll No.:52

Place: _____________
Date: _____________

ACKNOWLEDGEMENT
I would like to thank the University of Mumbai, for
introducing M.Com (Accounts) course, thereby giving its students
a platform to be abreast with changing business scenario, with
the help of theory as a base and practical as a solution.
I am indebted to the reviewer of the project Dr. Kinnarry
Thakkar,, my project guide who is also our Principal for her
support and guidance. I would sincerely like to thank her for all
her efforts.
Last but not the least; I would like to thank my parents for
giving the best education and for their support and contribution
without which this project would not have been possible.

______________________
Johnson Albert Isaac
(Student Name and sign)
ROLL NO.52

Index
1. Overview
2. History
3. Changing Trends In Economic Development
Of Germany
4. Conclusion

BibliographyTRENDS IN ECONOMIC
DEVELOPMENT OF A DEVELOPED
NATION

What do you mean by economic development??

Economic development generally refers to the sustained, concerted actions
of policy makers and communities that promote the living and economic
health of a specific area. Economic development can also be referred to as the
quantitative and qualitative changes in the economy. Such actions can involve
multiple areas including development of human capital, critical infrastructure,
regional competitiveness, environmental sustainability, social
inclusion, health, safety, literacy, and other initiatives. Economic development
differs from economic growth. Whereas economic development is a policy
intervention endeavour with aims of economic and social well-being of people,
economic growth is a phenomenon of market productivity and rise in GDP.
Consequently, as economist Amartya Sen points out: economic growth is one
aspect of the process of economic development.

The scope of economic development includes the process and policies by which
a nation improves the economic, political, and social well-being of its people.
The University of Iowa's Centre for International Finance and
Development states that:
'Economic development' is a term that economists, politicians, and others have
used frequently in the 20th century. The concept, however, has been in existence
in the West for centuries. Modernization, Westernisation, and especially
Industrialisation are other terms people have used while discussing economic
development. Economic development has a direct relationship with the
environment.
Although no one is sure when the concept originated, most people agree that
development is closely bound up with the evolution of capitalism and the
demise of feudalism

International Economic Development council:With more than 20,000 professional economic developers employed worldwide
in this highly specialized industry, the International Economic Development
Council (IEDC) headquartered in Washington, D.C. is a non-profit organization
dedicated to helping economic developers do their job more effectively and
raising the profile of the profession. With over 4,500 members across the US
and internationally, serving exclusively the economic development community,
8

IEDC membership represents the entire range of the profession ranging from
regional, state, local, rural, urban, and international economic development
organizations, as well as chambers of commerce, technology development
agencies, utility companies, educational institutions, consultants and
redevelopment authorities. Many individual states also have associations
comprising economic development professionals, who work closely with IEDC.

Community Competition
One unintended consequence of economic development is the intense
competition between communities, states, and nations for new economic
development projects in today's globalize world. With the struggle to attract and
retain business, competition is further intensified by the use of many variations
of economic incentives to the potential business such as: tax incentives,
investment capital, donated land, utility rate discounts, and many others. IEDC
places significant attention on the various activities undertaken by economic
development organizations to help them compete and sustain vibrant
communities.
Additionally, the use of community profiling tools and database templates to
measure community assets versus other communities is also an important aspect
of economic development. Job creation, economic output, and increase in
taxable basis are the most common measurement tools. When considering
9

measurement, too much emphasis has been placed on economic developers for
"not creating jobs." However, the reality is that economic developers do not
typically create jobs, but facilitate the process for existing businesses and startups to do so. Therefore, the economic developer must make sure that there are
sufficient economic development programs in place to assist the businesses
achieve their goals. Those types of programs are usually policy-created and can
be local, regional, state-wide and national in nature.

What do you mean by trends in economic

development/economic growth?
Economic growth also known as trends in economic development is the
increase in the amount of the goods and services produced by an economy over
time. It is conventionally measured as the percent rate of increase in real gross
domestic product, or real GDP. Growth is usually calculated in real terms
i.e., inflation-adjusted terms to eliminate the distorting effect of inflation on
the price of goods produced. In economics, "economic growth" or "economic
growth theory" typically refers to growth of potential output, i.e., production at
"full employment".
As an area of study, economic growth is generally distinguished
from development economics. The former is primarily the study of how
countries can advance their economies. The latter is the study of the economic
10

aspects of the development process in low-income countries. See also economic

development.
Since economic growth is measured as the annual percent change of gross
domestic product (GDP), it has all the advantages and drawbacks of that
measure.

Measuring economic growths/trends:Economic growth is measured as a percentage change in the Gross Domestic
Product (GDP) or Gross National Product (GNP). These two measures, which
are calculated slightly differently, total the amounts paid for the goods and
services that a country produced. As an example of measuring economic
growth, a country that creates $9,000,000,000 in goods and services in 2010 and
then creates $9,090,000,000 in 2011, has a nominal economic growth rate of 1%
for 2011.
To compare per capita economic growth among countries, the total sales of the
respected countries may be quoted in a single currency. This requires converting
the value of currencies of various countries into a selected currency, for example
U.S. dollars. One way to do this conversion is to rely on exchange rates among
currencies, for example how many Mexican pesos buy a single U.S. dollar?
Another approach is to use the purchasing power parity method. This method is

11

based on how much consumers must pay for the same "basket of goods" in each
country.

Inflation or deflation can make it difficult to measure economic growth. If GDP,

for example, goes up in a country by 1% in a year, was this due solely to rising
prices (inflation), or because more goods and services were produced and
saved? To express real growth rather than changes in prices for the same goods,
statistics on economic growth are often adjusted for inflation or deflation.
For example, a table may show changes in GDP in the period from 1990 to
2000, as expressed in 1990 U.S. dollars. This means that the single currency
being used is the U.S. dollar with the purchasing power it had in the U.S. in
1990. The table might mention that the figures are "inflation-adjusted" or real. If
no adjustment were made for inflation, the table might make no mention of
inflation-adjustment or might mention that the prices are nominal.
This can further be explained with the help of bar diagram as shown below.

12

Percentage changes in GDP growth spell length as each factor moves from 50th
to 60th percentile and all other factors are held constant. Income distribution is
measured by the Gini coefficient. Political institutions are measured by the
Polity IV Project scale. Exchange rate competitiveness is measured by rate
deviation from purchasing power parity adjusted for per capita income.

What are developed nations??

A developed nation or "more developed country" (MDC), is a sovereign state
that has a highly developed economy and advanced technological infrastructure
relative to other less developed nations. Most commonly, the criteria for
evaluating the degree of economic development are gross domestic
product (GDP), the per capita income, level of industrialization, amount of
widespread infrastructure and general standard of living. Developed countries
have post-industrial economies, meaning the service sector provides more
wealth than the industrial sector. They are contrasted with developing countries,
which are in the process of industrialization, or undeveloped countries, which
13

are pre-industrial and almost entirely agrarian. According to the International

Monetary Fund, advanced economies comprise 65.8% of global nominal GDP
and 52.1% of global GDP (PPP) in 2010. In 2011, the nine largest advanced
economies by either nominal GDP or GDP (PPP) are the United States,
the United Kingdom, Germany, France, Japan, Italy, Canada, Spain and South
Korea
Economic criteria have tended to dominate discussions. One such criterion is
income per capita; countries with high gross domestic product (GDP) per capita
would thus be described as developed countries. Another economic criterion
is industrialization; countries in which the tertiary and quaternary sectors of
industry dominate would thus be described as developed. More recently another
measure, the Human Development Index (HDI), which combines an economic
measure, national income, with other measures, indices for life expectancy and
education has become prominent. This criterion would define developed
countries as those with a very high (HDI) rating. However, many anomalies
exist when determining "developed" status by whichever measure is used.
Economic criteria have tended to dominate discussions. One such criterion is
income per capita; countries with high gross domestic product (GDP) per capita
would thus be described as developed countries. Another economic criterion
is industrialization; countries in which the tertiary and quaternary sectors of
industry dominate would thus be described as developed. More recently another
14

measure, the Human Development Index (HDI), which combines an economic

measure, national income, with other measures, indices for life expectancy and
education has become prominent. This criterion would define developed
countries as those with a very high (HDI) rating. However, many anomalies
exist when determining "developed" status by whichever measure is used.

What are developing nations??

A developing nation, also called a less-developed country (LDC), is a nation

with a low living standard, underdeveloped industrial base, and low Human
Development Index (HDI) relative to other countries There is no universal,
agreed-upon criterion for what makes a country developing versus developed
and which countries fit these two categories, although there are general
reference points such as the size of a nation's GDP compared to other nations.
Countries with more advanced economies than other developing nations but that
have not yet demonstrated signs of a developed country, are often categorized
under the term newly industrialized countries.
Developing countries are, according to certain authors as Walt Whitman
Rostow, countries in transition from various traditional lifestyles towards the
modern lifestyle begun by the Industrial Revolution in the eighteenth and
nineteenth centurie

A developing country, also called a less-developed country (LDC) is a nation

with a low living standard, underdeveloped industrial base, and low Human
15

Development Index (HDI) relative to other countries.[2][3] There is no universal,

agreed-upon criterion for what makes a country developing versus developed
and which countries fit these two categories, although there are general
reference points such as the size of a nation's GDP compared to other nations.
Countries with more advanced economies than other developing nations but that
have not yet demonstrated signs of a developed country, are often categorized
under the term newly industrialized countries.
Developing countries are, according to certain authors as Walt Whitman Rostow,
countries in transition from various traditional lifestyles towards the modern lifestyle begun
by the Industrial Revolution in the eighteenth and nineteenth centuries

HISTORY:The ethno genesis of the Germanic tribes is assumed to have occurred during
the Nordic Bronze Age, or at the latest during the Pre-Roman Iron Age. From
southern Scandinavia and northern Germany, the tribes began expanding south,
east and west in the 1st century BC, coming into contact with the Celtic tribes
of Gaul, as well as Iranian, Baltic, and Slavic tribes in Central Europe.
Little is known about early Germanic history, except through their recorded
interactions with the Roman Empire, etymological research and archaeological
finds.
In the first years of the 1st century, Roman legions conducted a long campaign
in Germania, the area north of the Upper Danubeand east of the Rhine, in an

16

attempt to expand the Empire's frontiers and shorten its frontier line. They
subdued several Germanic tribes, such as the Cherusci. The tribes became
familiar with Roman tactics of warfare while maintaining their tribal identity. In
9 AD, a Cherusci chieftain named Arminius defeated a Roman army in
the Battle of the Teutoburg Forest, a victory credited with stopping the Roman
advance into Germanic territories[2] and forming the birth of German history.
Modern Germany, east of the Rhine, remained outside the Roman Empire. By
AD 100, the time of Tacitus's Germania, Germanic tribes settled along the
Roman frontier at the Rhine and the Danube (the Limes Germanicus),
occupying most of the area of modern Germany; however, Austria,
southernBavaria, and the western Rhineland were Roman provinces.
The 3rd century saw the emergence of a number of large West Germanic
tribes: Alamanni, Franks, Bavarii, Chatti, Saxons, Frisii,Sicambri,
and Thuringii. Around 260, the Germanic peoples broke through the Limes and
the Danube frontier into Roman-controlled lands.
Seven large German-speaking tribes
the Visigoths, Ostrogoths, Vandals, Burgundians, Lombards, Saxons and Franks
moved west and took part in the Decline of the Roman Empire and
transformation of the old Western Roman Empire.

17

The unoccupied part of present Germany was invaded by the Huns at the end of
the 4th century and led to the beginning of the Migration Period. Hunnic
hegemony of Germany lasted until 469.

The Stem Duchies and Marches

Stem Duchies (tribal duchies) in Germany were mainly the areas of the old
German tribes of the region, especially in the east.
In the 5th century, the Vlkerwanderung (or Germanic migrations) brought a
number of Barbarian tribes into the failing Roman Empire. Tribes that became
stem duchies were originally the Alamanni, the Thuringii, the Saxons,
the Franks, the Burgundies, and the Rugii.[6] In contrast to later duchies, these
entities were not defined by strict administrative boundaries but by the area of
settlement of major Germanic tribes. Over the next few centuries, some tribes
warred, migrated, and merged. All these tribes in Germania were eventually
subjugated by the Franks. However, remnants of several stem duchies survive
today as states or regions in modern Western Europe countries:
German states such as Bavaria and Saxony, German regions like Swabia, and
French regions such as of Burgundy, and Lorraine.
Germans in the east also founded a series of border counties or Marches. To the
north, these included Lusatia, the North March that would
become Brandenburg and the heart of Prussia, and the Billung March. In the
18

south, the marches included Carniola, Styria, and the March of Austria that
would become Austria
GEOGRAPHICAL LOCATION:Germany is a country situated in central Europe. The country consists of 16
states and its capital and largest city is Berlin. Germany covers an area of
357,021 square kilometres (137,847 sq mi) and has a largely temperate seasonal
climate.Its neighbouring countries are Demark, Sweden, France, Switzerland,
Austria, Czech republic & Poland. With 80.3 million inhabitants, it is the most
populous member state in the European Union. Its chief language is German.
Religions followed there are Roman Catholic, Muslim, protestant and others.
Germany is the major economic and political power of the European continent
and a historic leader in many theoretical and technical fields.

POLITICAL AND ECONOMICAL ASPECT:Germany is the world's fourth-largest economy by nominal GDP and the fifthlargest by purchasing power parity. As a global leader in several industrial and
technological sectors, it is the second-largest exporter and third-largest
importer of goods. The country ranks highly in many international metrics of
performance, has developed a very high standard of living, and features a
comprehensive social security system, which includes the world's
19

oldest universal health care system. Known for its rich

cultural and political history, Germany has been the home of many
influential philosophers, music composers, scientists, and inventors.
Germany has a social market economy with a highly skilled labour force, a
large capital stock, a low level of corruption, and a high level of innovation. It
has the largest and most powerful national economy in Europe, the fourth
largest by nominal GDP in the world, the fifth largest by PPP, and was the
biggest net contributor to the EU budget in 2011. The sector contributes
approximately 71% of the total GDP, industry 28%, and agriculture 1%. The
official average national unemployment rate in June 2013 was 6.6%.However,
the official average national unemployment rate also includes people with a
part-time job that are looking for a full-time job. The unofficial average national
unemployment rate in 2011 was 5.7%.
Germany is an advocate of closer European economic and political integration.
Its commercial policies are increasingly determined by agreements among
European Union (EU) members and by EU legislation. Germany introduced the
common European currency, the euro, on 1 January 2002. Its monetary policy is
set by the European Central Bank, which is headquartered in Frankfurt. Two
decades after German reunification, standards of living and per capita incomes
remain significantly higher in the states of the former West Germany than in the
former East. The modernisation and integration of the eastern German economy
20

is a long-term process scheduled to last until the year 2019, with annual
transfers from west to east amounting to roughly $80 billion. In January 2009
the German government approved a 50 billion economic stimulus plan to
protect several sectors from a downturn and a subsequent rise in unemployment
rates. Politically, Germany has a federal republic. Its defence budget rounds up
to about $45 billion.

CHANGING TRENDS IN ECONOMIC

DEVELOPMENT OF GERMANY:-

Ancient history:-

Germany before 1800 was heavily rural, with some urban trade centers. In the
19th century it began a stage of rapid economic growth and modernization, led
by heavy industry. By 1900 it had the largest economy in Europe, a factor that
played a major role in its entry into World War I and World War II. Devastated
by World War II, West Germany became an "economic miracle" in the 1950s
and 1960s with the help of the Marshall Plan. Currently it is the largest
individual economy in the EU with GDP of roughly 3 trillion USD

21

Economic prosperity did not mean geographical expansion; it required

collaboration with some, competition with others, and an intimate
understanding among government, commerce, and production. A desire to save
was also born in the German experience of political, military, and economic
uncertainty

The thirty years war:-

The Thirty Years' War (16181648) was ruinous to the twenty million civilians
and set back the economy for generations, as marauding armies burned and
destroyed what they could not seize. The fighting often was out of control, with
marauding bands of hundreds or thousands of starving soldiers spreading
plague, plunder, and murder. The armies that were under control moved back
and forth across the countryside year after year, levying heavy taxes on cities,
and seizing the animals and food stocks of the peasants without payment. The
enormous social disruption over three decades caused a dramatic decline in
population because of killings, disease, crop failures, declining birth rates and
random destruction, and the out-migration of terrified people. One estimate
shows a 38% drop from 16 million people in 1618 to 10 million by 1650, while
another shows "only" a 20% drop from 20 million to 16 million.
22

The Altmark and Wrttemberg regions were especially hard hit. It took
generations for Germany to fully recover.
The emancipation of the serfs came in 1770-1830, beginning with then Danish
Schleswig in 1780. Prussia abolished serfdom with the October Edict of 1807,
which upgraded the personal legal status of the peasantry and gave them the
chance to purchase for cash part of the lands they were working. They could
also sell the land they already owned. The edict applied to all peasants whose
holdings were above a certain size, and included both Crown lands and noble
estates. The peasants were freed from the obligation of personal services to the
lord and annual dues. A bank was set up so that landowner could borrow
government money to buy land from peasants (the peasants were not allowed to
use it to borrow money to buy land until 1850). The result was that the large
landowners obtained larger estates, and many peasant became landless tenants,
or moved to the cities or to America. The other German states imitated Prussia
after 1815.

In sharp contrast to the violence that characterized land reform in the French
Revolution, Germany handled it peacefully. In Schleswig the peasants, who had
been influenced by the Enlightenment, played an active role; elsewhere they
were largely passive. Indeed, for most peasants, customs and traditions

23

continued largely unchanged, including the old habits of deference to the nobles
whose legal authority remains quite strong over the villagers.
Although the peasants were no longer tied to the same land like serfs had been,
the old paternalistic relationship in East Prussia lasted into the 20th century
This was followed by the great Industrial revolution from 1850-1990.

Industrial revolution and changing trend from 1850-1990:-

Before 1850 Germany lagged far behind the leaders in industrial development,
Britain, France and Belgium. By mid-century, however, the German states were
catching up, and by 1900 Germany was a world leader in industrialization,
along with Britain and the United States. In 1800, Germany's social structure
was poorly suited to entrepreneurship or economic development. Domination by
France during the era of the French Revolution (1790s to 1815), produced
important institutional reforms, including the abolition of feudal restrictions on
the sale of large landed estates, the reduction of the power of the guilds in the
cities, and the introduction of a new, more efficient commercial law.
Nevertheless, traditionalism remained strong in most of Germany. Until midcentury, the guilds, the landed aristocracy, the churches, and the government

24

bureaucracies had so many rules and restrictions that entrepreneurship was held
in low esteem, and given little opportunity to develop. From the 1830s and
1840s, Prussia, Saxony, and other states reorganized agriculture, introducing
sugar beets, turnips, and potatoes, yielding a higher level of food production
that enabled a surplus rural population to move to industrial areas. The
beginnings of the industrial revolution in Germany came in the textile industry,
and was facilitated by eliminating tariff barriers through the Zollverein, starting
in 1834.
The take-off stage of economic development came with the railroad revolution
in the 1840s, which opened up new markets for local products, created a pool of
middle manager, increased the demand for engineers, architects and skilled
machinists and stimulated investments in coal and iron. The political decisions
about the economy of Prussia (and after 1871 all Germany) were largely
controlled by a coalition of "rye and iron", that is the Junker landowners of the
east and the heavy industry of the west. The main areas in which Germany
brought industrial changes are explained ahead.

The supporting regions were as under: Regions:-

25

The north German states were for the most part richer in natural resources than
the southern states. They had vast agricultural tracts from Schleswig-Holstein in
the west through Prussia in the east. They also had coal and iron in the Ruhr
Valley. Through the practice of primogeniture, widely followed in northern
Germany, large estates and fortunes grew. So did close relations between their
owners and local as well as national governments.
The south German states were relatively poor in natural resources and those
Germans therefore engaged more often in small economic enterprises. They also
had no primogeniture rule but subdivided the land among several offspring,
leading those offspring to remain in their native towns but not fully able to
support themselves from their small parcels of land. The south German states,
therefore, fostered cottage industries, crafts, and a more independent and selfreliant spirit less closely linked to the government.

And the various industrial approaches are as under:-

Coal:The first important mines appeared in the 1750s, in the valleys of the rivers
Ruhr, Inde and Wurm where coal seams outcropped and horizontal adit mining
was possible. In 1782 the Krupp family began operations near Essen. After 1815
entrepreneurs in the Ruhr Area, which then became part of Prussia took
26

advantage of the tariff zone (Zollverein) to open new mines and associated iron
meters. New railroads were built by British engineers around 1850. Numerous
small industrial centres sprang up, focused on ironworks, using local coal. The
iron and steel works typically bought mines, and erected cooking ovens to
supply their own requirements in coke and gas. These integrated coal-iron firms
("Huettenzechen") became numerous after 1854; after 1900 they became mixed
firms called "Konzern."
The average output of a mine in 1850 was about 8,500 short tons; its
employment about 64. By 1900, the average mine's output had risen to 280,000
and the employment to about 1,400. Total Ruhr coal output rose from 2.0
million short tons in 1850 to 22 in 1880, 60 in 1900, and 114 in 1913, on the
verge of war. In 1932 output was down to 73 million short tons, growing to 130
in 1940. Output peaked in 1957 (at 123 million), declining to 78 million short
tons in 1974. End of 2010 five coal mines were producing in Germany.
The miners in the Ruhr region were divided by ethnicity (with Germans and
Poles) and religion (Protestants and Catholics). Mobility in and out of the
mining camps to nearby industrial areas was high. The miners split into several
unions, with an affiliation to a political party. As a result the socialist union
(affiliated with the Social Democratic Party) competed with Catholic and
Communist unions until 1933, when the Nazis took over all of them. After 1945
the socialists came to the fore.
27

Above are the regions covered by the ancient coal mines areas of Germany.

Banks and Cartels:German banks played central roles in financing German industry. Different
banks formed cartels in different industries. Cartel contracts were accepted as
legal and binding by German courts although they were held to be illegal in
Britain and the United States.
The process of cartelization began slowly, but the cartel movement took hold
after 1873 in the economic depression that followed the post-unification
speculative bubble. It began in heavy industry and spread throughout other
industries. By 1900 there were 275 cartels in operation; by 1908, over 500. By
some estimates, different cartel arrangements may have numbered in the

28

thousands at different times, but many German companies stayed outside the
cartels because they did not welcome the restrictions that membership imposed.
The government played a powerful role in the industrialization of the German
Empire founded by Otto von Bismarck in 1871 during a period known as
the Second Industrial Revolution. It supported not only heavy industry but also
crafts and trades because it wanted to maintain prosperity in all parts of the
empire. Even where the national government did not act, the highly autonomous
regional and local governments supported their own industries. Each state tried
to be as self-sufficient as possible.
Despite the several ups and downs of prosperity and depression that marked the
first decades of the German Empire, the ultimate wealth of the empire proved
immense. German aristocrats, landowners, bankers, and producers created what
might be termed the first German economic miracle, the turn-of-the-century
surge in German industry and commerce during which bankers, industrialists,
mercantilists, the military, and the monarchy joined forces.

Class and Welfare state:Germany's middle class, based in the cities, grew exponentially, but it never
gained the political power it had in France, Britain or the United States. The
29

Association of German Women's Organizations (BDF) was established in 1894

to encompass the proliferating women's organizations that had sprung up since
the 1860s. From the beginning the BDF was a bourgeois organization, its
members working toward equality with men in such areas as education,
financial opportunities, and political life. Working-class women were not
welcome; they were organized by the Socialists.
Bismarck built on a tradition of welfare programs in Prussia and Saxony that
began as early as in the 1840s. In the 1880s he introduced old age pensions,
accident insurance, medical care and unemployment insurance that formed the
basis of the modern European welfare state. His paternalistic programs won the
support of German industry because its goals were to win the support of the
working classes for the Empire and reduce the outflow of immigrants to
America, where wages were higher, but welfare did not exist. Bismarck further
won the support of both industry and skilled workers by his high tariff policies,
which protected profits and wages from American competition, although they
alienated the liberal intellectuals who wanted free trade.

Railways:Political disunity of three dozen states and a pervasive conservatism made it

difficult to build railways in the 1830s. However, by the 1840s, trunk lines did
30

link the major cities; each German state was responsible for the lines within its
own borders. Economist Friedrich List summed up the advantages to be derived
from the development of the railway system in 1841:

As a means of national defence, it facilitates the concentration,

distribution and direction of the army.

It is a means to the improvement of the culture of the nation. It brings

talent, knowledge and skill of every kind readily to market.

It secures the community against dearth and famine, and against

excessive fluctuation in the prices of the necessaries of life.

It promotes the spirit of the nation, as it has a tendency to destroy the

Philistine spirit arising from isolation and provincial prejudice and vanity. It
binds nations by ligaments, and promotes an interchange of food and of
commodities, thus making it feel to be a unit. The iron rails become a nerve
system, which, on the one hand, strengthens public opinion, and, on the
other hand, strengthens the power of the state for police and governmental
purposes.

Lacking a technological base at first, the Germans imported their engineering

and hardware from Britain, but quickly learned the skills needed to operate and
expand the railways. In many cities, the new railway shops were the centres of
31

technological awareness and training, so that by 1850, Germany was selfsufficient in meeting the demands of railroad construction, and the railways
were a major impetus for the growth of the new steel industry. Observers found
that even as late as 1890, their engineering was inferior to Britains. However,
German unification in 1870 stimulated consolidation, nationalisation into stateowned companies, and further rapid growth. Unlike the situation in France, the
goal was support of industrialisation, and so heavy lines crisscrossed the Ruhr
and other industrial districts, and provided good connections to the major ports
of Hamburg and Bremen. By 1880, Germany had 9,400 locomotives pulling
43,000 passengers and 30,000 tons of freight, and pulled ahead of France

Agriculture:Perkins (1981) argues that more important than Bismarck's new tariff on
imported grain was the introduction of the sugar beet as a main crop. Farmers
quickly abandoned traditional, inefficient practices for modern new methods,
including use of new fertilizers and new tools. The knowledge and tools gained
from the intensive farming of sugar and other root crops made Germany the
most efficient agricultural producer in Europe by 1914. Even so farms were
small in size, and women did much of the field work. An unintended

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consequence was the increased dependence on migratory, especially foreign

labour

Chemicals:The economy continued to industrialize and urbanize, with heavy industry (coal
and steel especially) becoming important in the Ruhr, and manufacturing
growing in the cities, the Ruhr, and Silesia. Based on its leadership in chemical
research in the universities and industrial laboratories, Germany became
dominant in the world's chemical industry in the late 19th century. Big
businesses such as BASF and Bayer led the way in their production and
distribution of artificial dyes and pharmaceuticals during the Wilhelmine era,
leading to the German monopolisation of the global chemicals market at 90
percent of the entire share of international volumes of trade in chemical
products by 1914.

Steel:Germany became Europe's leading steel-producing nations in the late 19th

century, thanks in large part to the protection from American and British
competition afforded by tariffs and cartels.The leading firm was "Friedrich

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Krupp AG Hoesch-Krupp" run by the Krupp family. The "German Steel

Federation" was established in 1874.

CONCLUSION:The above project gives us an insight on the country, its positives and negatives.
Germany is a country that has risen from ashes. With every fall down, the
countrys economy has always pushed back with grater impact.
It is one of the leading developed countries in todays time.
It is known worldwide for the famous brands that it has; for example the
Volkswagen.

Today Germany holds: Revenue: $1.398 trillion

Expenditure: $1.54 trillion.
Its principle places of exports are: France, US, Netherlands, UK,
Italy, China, Russia, Austria.
GDP (per captai): $34,200

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 GDP ((growth rate): -5%.

BIBLIOGRAPHY:1) The penguin CNBC-TV 18 business.

Author: Derek o Brien
2) Internet :www money control.com/www.wikipedia.com
3) The economic times-magazine

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