1 Introduction
1.1 Outline
This thesis begins with two studies that use the DEA to study nineteenth century American in-dustry. Though this industry has been intensively studied in the literature, the DEA can still shed light on topics that could not be answered hitherto. I begin by studying economies of scale and I show that substantial economies of scale existed before the Civil War. Afterwards, I examine efficiency differences between the Southern and Northern states before the Civil War. The literature could not establish whether a Southern efficiency lag might explain the differences in the economic structure between the North and the South. These efficiency
dif-ferences might be the results of less efficient management in the Southern states. My results show that, though the South is among the less efficient regions, one can not definitely state ef-ficiency deficits for the South. Additionally the existing differences in efef-ficiency are small and likely not able to explain the differences in the economic development after the war.
The American Civil War is the background of the second chapter. Its political, eco-nomic and social effects have been discussed in a numerous literature. The focus of my work is on the effect of the war on efficiency. While the literature examines the impact of the war on the location or structure of the industry, I ask what the war changed in the way the eco-nomy works. With a large data set sampled from the American Manufacturing Census I estim-ate efficiency and find that the war was indeed used to restructure the production processes in the Southern territories, which gives the Southern industry a slight advantage in technical effi-ciency after the war. In other effieffi-ciency categories I show a larger effect of the war, though the effects all in all seem small compared to the conventional historiography that reports large and terrible destructions. But my results are more in line with a newer reinterpretation of the destruction reports (Neely 2007) which documents that commanders in the war were well aware that they were fighting against brothers and often tried to limit destruction.
Next, I present two studies, both co-authored with Prof. Dr. Jörg Baten, which are con-cerned with the industry of Tsarist Russia. These do not use the DEA but other approaches to give a balanced methodological approach to efficiency and productivity measurement. The first article, “Do numeracy and health determine labor productivity in Tsarist Russia?”, uses OLS regressions to asses the determinants of labor productivity. The main focus of this study
is the impact of human capital and heights on labor productivity, and we find a large positive effect for both. Political factors, especially taxation, also show an influence on productivity.
The second study looks at the determinants of firm creation rates in Tsarist Russia.
This chapter is based on a study published in the Russian Economic History Yearbook, which is the reason why the structure of that chapter differs slightly from the other chapters. Though it is not concerned with efficiency, firm creation is a central part of successful industrial de-velopment, which is also a topic discussed in the other papers. Next, new firms add competit-ive pressure to existing firms and thereby may increase the efficiency of the industry as a whole (see Hermalin 1992). The most important finding is that human capital has a strong positive impact on firm creation rates. Educated people are ceteris paribus more likely to cre-ate firms (for evidence in modern times see Acs and Armington 2002), thereby increasing economic growth.
The sixth chapter leaves the direct focus on industry to use the methods introduced in this thesis in another branch of the historic literature. Together with Matthias Blum and Luis Huergo I analyze government performance from the 1870s to the 1980s. We view govern-ments as a form of producers, as each country has endowgovern-ments, such as land, capital etc. and uses those to produce welfare. This transformation of the available inputs into outputs is viewed as a kind of production process and we use the DEA to assess the efficiency of this process. The chapter expands the existing literature, which only considers the period after 1965, and we are the first to study the interesting world war two and inter-war period. Our results show among others that fractionalized societies had markedly less success in creating welfare than more unified nations.
The last section concludes this thesis by summarizing the most important findings and showing possible areas for future research, where the methods used in this thesis might be fruitfully employed to further enhance our understanding of history.
References
Acs, Z. J. and C. Armington (2002). The Determinants of Regional Variation in New Firm Foundation. Regional Studies 36 (1), 33-45.
Cooper, W. W., Seiford, L. M. and K. Tone (2006). Introduction to data envelopment analysis and its uses. With DEA-solver software and references. New York: Springer.
Hermalin B. E. (1992). The Effects of Competition on Executive Behavior. The RAND Journ-al of Economics 23 (3), 350-365.
Neely, M. E. (2007). The Civil War and the limits of destruction. Cambridge, Mass.: Harvard University Press.
Saraydar, E. (1989). The Conflation of Productivity and Efficiency in Economics and Eco-nomic History. EcoEco-nomics and Philosophy 5 (1), 55-67.
Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations.Chicago:
University Of Chicago Press.
Sokoloff, K. L. and V. Tchakerian (1997). Manufacturing where Agriculture predominates:
Evidence from the South and Midwest in 1860. Explorations in Economic History 24 (3), 243-264.