ABSTRACT
In our discussion of economic development in Austria-Hungary we drew attention to the extreme differences in regional levels of development which existed there. We also pointed to the great gap in development between the eastern and south-eastern provinces of the country on the one hand and the German and Czech provinces on the other. This gap was mainly the result of long-existing historical circumstances which had created in eastern and south-eastern Europe a large area where the obstacles to economic development were, by European standards, unique and severe. The important improvements in agricultural techniques had been confined to northern, western and central Europe resulting in a much lower relative level of agricultural productivity in the south-east and that fact together with the lower level of external commerce had created an area where per capita incomes were too low to promote the indigenous growth of manufacturing output on a large enough scale. Whilst the process of rapid industrialisation went ahead elsewhere on the continent, south-eastern Europe remained a backward area displaying before 1914, as far as can be estimated, hardly any of the increase in per capita incomes which industrialisation ultimately brought to most of the continent. The survival long into the nineteenth century of a number of institutional obstacles to development, such as serfdom, none of them fundamental but most of them no longer existing on the rest of the continent, exaggerated this gap in development and made it harder to close.
