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Brief Economic Overview

According to some scholars, economic superiority was the main reason for the Entente’s victory in World War I. Since economic warfare is outside of the scope of this exhibit, the topic is not covered extensively. Nevertheless, one cannot omit at least a surficial overview of the economics of the war.

Broadberry and Harrison in The Economics of World War I point out that the level of economic development of each side and its resources determined the outcome of the war. They argue that the greater Allied capacity for taking risks, absorbing the cost of mistakes, replacing losses, and accumulating overwhelming quantitative superiority eventually turned the balance in their favor. According to them, the influence of the economic factors was not independent: motivation played an important role. Generally, given superior resources, the richer countries were able to solve the motivation problems that defeated the poorer ones. It also helped that the richest great power, the US, replaced the poorest, Russia, when the latter left the war after the revolution of 1917. The Gross Domestic Product being arguably the most important economic factor, we decided to present a very basic comparison between the sides based on the change in GDP, in the form of histograms. They show the changes in nominal Gross Domestic Product of the Central Powers and the Entente. The histograms were generated based on data mainly from Broadberry and Harrison’s book.

The data show that the economic advantage of the Entente over the Central Powers was substantial at the outbreak of the war and rose steadily during its course, especially with the USA’s entry in 1917. In terms of resources the Central Powers did not stand a chance: if Germany could not win the war very quickly, using its superior military power, over a longer period of time the balance of resources would count more and more. If we look at the Central Powers, for much of the war the German and Austrian economies kept at 20%-25% below their prewar levels; it is estimated that by 1918 the GDP of the Ottoman Empire had declined by 30%-40%. Since the war ended with a ceasefire (German troops were still standing on foreign soil), the failure of the Central Powers was due to the failure of their economies, and not their armies.

The charts present the change in nominal GDP for both sides combined as well as broken doen by alliance (Central Powers and Entente.) They were generated by the Olin Library Maps Department staff using ArcGIS mapping software.