Economic Growth

Economic growth, that is, the long-term increase in aggregate output, both in absolute terms and per capita, is a key phenomenon of modern societies, which is inconceivable without such economic growth. The key indicator of this growth today is real GDP adjusted for price changes, which shows in its level the level of gross domestic product and in its growth rates the extent of the relative change in this product from one period to the next. Dividing GDP by population yields GDP per inhabitant, which can be used both as a measure of productivity and as a measure of prosperity. As a measure of productivity, it indicates how much each inhabitant in Germany produces on average. If one uses the GDP per capita as a measure of prosperity, then it is assumed that the total economic production (at least the largest part of it) flows to the inhabitants as an income.

However, the long-term increase in aggregate output is not steady and steady (which would mean a constant GDP growth rate), but rather is embedded in a more or less pronounced rhythmic alternation of upturn and downturn, prosperity and depression referred to as the economy. Closely associated with the term economy is the notion of regularity. The changes in the overall situation of the economy that repeat themselves according to a certain pattern are therefore also called economic cycles. Over the years, research has identified cycles of varying lengths and different explanations.  For a long time, growth and the economy were seen alongside structural change as the dominant patterns of modern economies. Crises and depression were seen as part of the business cycle and thus as a normal part of the growth process. The financial and global economic crisis of 2007/2008 triggered a radical rethink here. For many, modern global capitalism has since been (again) extremely fragile and vulnerable to crises. Accordingly, the economic crisis represents an independent development of modern economies in addition to the economy and therefore requires its own historical and theoretical analysis. Economic growth, the economy and the crisis are therefore central to the description of the long series of GDP reconstructed here. The table shows GDP in both constant and constant prices, both in absolute terms and per capita (all figures in euros), the index values ​​of the GDP series and the annual growth rates of GDP in constant prices from 1850 to 2012.

When looking at the GDP series in respective (current) prices, the following can be stated: In 2012, the value of GDP is 2 643.9 billion euros, in 1950 it is 49.69 billion euros for the territory of the former Federal Republic, in 1913 (for the territory of the German Reich) 28.95 and finally in 1850 3.64 billion euros for the territory of the later German Empire without Alsace-Lorraine. If one sets 1913 = 100, then the index rises from 12.6 in the year 1850 to 9 133 in the year 2012. The GDP per inhabitant in respective prices rises in a similar dramatic way. In 2012, it was 32 276 euros, in 1950 it was 1 059 euros, 1913 432 euros and 1850 103 euros (again for the aforementioned territorial boundaries). If one again sets 1913 = 100, the index increases from 24 in 1850 to 7 478 in 2012. The differences between GDP as a whole and GDP per capita result from population growth.

1. For values ​​given in current prices, changes can be due to both price and quantity changes. If you want to eliminate the price changes, you have to keep the prices of the goods and services recorded constant. However, as the prices of goods and services change not only because of monetary value, but also because existing goods are offered in a different quality and also because goods disappear from supply and new ones are added, price adjustment of the figures is a difficult statistical one Problem. The variables of the national accounts, which are given in constant prices, are assumed to measure the real values ​​or changes in value while eliminating monetary fluctuations. The resulting GDP at constant prices, for example, is interpreted as a measure of real macroeconomic production, that is, the monetary value remaining the same or a constant purchasing power of money.

2.  Rainer Metz in detail: Economic trends in the 19th and 20th centuries, in: Günther Schulz et al. (Ed.): Social and economic history. Fields of work – Problems – Perspectives. 100 Years Quarterly Journal of Social and Economic History (Quarterly Journal of Social and Economic History, Supplement 169), Stuttgart 2004, pp. 217-248.

3. The basis for the reconstruction is from 1950 the official statistics (Federal Statistical Office and Deutsche Bundesbank), from 1901 to 1949 the data of Albrecht Ritschl / Mark Spoerer: The gross national product in Germany according to the official national income and social product statistics 1901-1995, in: Yearbook of Economic History, 1997/2, pp. 27-54, from 1850 to 1900 Walther G. Hoffmann: The Growth of the German Economy since the Mid-19th Century, Berlin and Others 1965 and for 1830 Angus Maddison’s details: www.ggdc.net/maddison. The index values ​​for the price adjusted GDP starting from 1950 are taken over by the German central bank. They differ slightly from the values ​​of the Federal Statistical Office, since the Bundesbank makes some of its own estimates. We have multiplied these index values ​​by the nominal GDP value for the year 2005 (= € 2,224.4 billion) and thus receive a price-adjusted GDP series in 2005 prices.

4. This ensures that the distances are not scaled according to absolute, but according to relative changes, that is, a change of, for example, 10 percent always has the same distance on the y-axis, regardless of the absolute value.