Institutions vs. demand: determinants of agricultural development in Saxony, 1660–1850

Pfister Ulrich, Kopsidis Michael

Abstract

The study produces new data on the long-term development of vegetable foodstuff output and average labor productivity in Saxon agriculture c. 1660-1850. This territory saw an early development of a large, but spatially dispersed industrial sector and an agrarian reform in 1832. We establish, first, that food demand from the labor force of the non-agricultural sectors promoted agricultural development in the absence of urbanization as well; nevertheless, the spatial dispersion of demand limited the pace of growth. Second, agrarian reform had no effect on output and productivity growth. This is because, on the one hand, the reform consisted mainly in a redistribution of income from land in the long run and did not affect incentive structures. On the other hand, property rights during the pre-reform period were both sufficiently secure and negotiable to reallocate land to more intensive patterns of arable farming under a traditional property rights regime.