After exit:the Habsburg economy since 1870

Austria’s defeat at the hands of Prussia in the 1866 war settled the long-running struggle for supremacy in German-speaking Central Europe. The constitutional Compromise of 1867, effective from 1868, established Austria-Hungary in place of the former Austrian Empire, where Hungary gained ‘full internal autonomy and most of the status of an independent country, but remained united with Austria in the person of the common monarch. Austria’s relative income position weakened as her economic fortunes diverged not just from those of Germany but also much of western Europe. Technical and organisational progress, then, made a markedly smaller contribution to labour productivity growth in the Empire compared to Germany. Industrialisation as well as the timing and pace of modern economic growth in late eighteenth- and nineteenth-century Europe were profoundly regional phenomena. The limited comparative evidence that is currently available suggests that economic agents in Germany and its regions enjoyed far better access to markets than the Habsburg Empire.