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Austria and Hungary have historically had different economic trajectories, with Austria generally being more developed and wealthier. When the two countries united in 1867, Austria was more industrialized, and this disparity continued as economic growth was centred on western areas like Vienna, Bohemia, and Silesia. By 1913, Austria's GNP had doubled from 1870, and while Austria-Hungary saw significant economic growth, it was more pronounced in the western regions, leaving the eastern regions less developed. Today, this disparity persists, with Austria's GDP per person nearly four times that of Hungary's, resulting in Hungarians often looking to Austria as their economic ideal.
| Characteristics | Values |
|---|---|
| Austria's GDP per person | $51,306 |
| Hungary's GDP per person | $13,881 |
| Austria-Hungary's growth from 1870 to 1913 | 93% |
| Europe's growth from 1870 to 1913 | 115% |
| Austria's position in the first Industrial Revolution | Dominant |
| Hungary's position in the second Industrial Revolution | Dominant |
| Length of railway lines in Austria-Hungary in 1867 | 6,000 km |
| Length of railway lines in Austria-Hungary after unification | 7,600 km |
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What You'll Learn
Austria's GDP per person is nearly four times that of Hungary's
Historically, the Austro-Hungarian Empire recognized the need for railways to connect its large territory and population. The construction of railways began before the union of Austria and Hungary in 1867, with 6000 km of lines built, mainly in the more industrialized Austria. After the union, rapid industrialization occurred around Vienna, Bohemia, and Silesia, further contributing to Austria's economic development. By the early 20th century, the division of labour between the east and west within the Empire led to rapid economic growth in both Austria and Hungary.
During this period, Vienna raised tariffs in the 1870s and 1880s to protect its growing industries, resulting in strong economic growth. While the GDP growth rate of Austria-Hungary from 1870 to 1913 was slightly lower than that of the rest of Europe, the growth of GDP per capita was higher, indicating a focus on economic development that benefited the population. This growth was centred on Vienna, Budapest, and Prague, as well as the Austrian lands, the Alpine region, and the Bohemian lands.
In the late 19th century, Hungary also experienced economic growth, particularly in the central Hungarian plain and the Carpathian lands. Following the invention of the roller mill in the 1860s, Hungary became the world's second-largest exporter of flour. However, while Hungary excelled in certain industries, it could not dominate the sectors of the First Industrial Revolution, which remained under Austrian dominance. This dynamic contributed to the disparity in economic development between the two countries, with Austria maintaining a higher GDP per person even to the present day.
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Austria's infrastructure is more developed
When Austria and Hungary united in 1867, Austria was already more industrialized, with 6000 km of railway lines built. Soon after, all major cities were connected by 7600 km of new lines, which promoted rapid industrialization around Vienna, Bohemia, and Silesia. This led to economic growth that centered on Vienna, Budapest, and Prague, as well as the Austrian lands, the Alpine region, and the Bohemian lands. The western areas, mainly around Prague and Vienna, excelled in various manufacturing industries. This trend continued, and by the end of the 19th century, the economic differences between the western and eastern areas of the Empire began to even out, as economic growth in the eastern parts consistently surpassed that of the west.
Hungary held its own in the industries of the Second Industrial Revolution, where Austrian competition could not dominate. The Austro-Hungarian Empire as a whole built up the fourth-largest machine-building industry in the world and was the third-largest manufacturer and exporter of electric appliances and facilities for power plants. Hungary also had a strong agriculture and food industry, centered around Budapest, which made up a large proportion of exports to the rest of Europe. In the 1860s, Hungary became the world's second-largest exporter of flour, after the United States, and Budapest became the world's largest flour-milling center.
However, the overall economic growth of Austria outpaced that of Hungary. In the 21st century, the economic and quality-of-life statistics continue to show a large disparity between the two countries. Austria's GDP per person ranks 13th in the world at $51,306, nearly four times higher than Hungary's at $13,881. This disparity is also evident in the infrastructure of the two countries, with Austria boasting better roads and trains, and tidier villages with freshly painted houses.
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Hungary has a gritty aesthetic
Hungary's cities and villages often have a "rough around the edges" look, with a grittier, less polished appearance. The trains are rickety, the villages are dusty, and bicycles outnumber cars. Many homes have faded paint and cracked siding, giving a sense of a country that is "down at the heel". This is in stark contrast to the pristine image often associated with Austria.
The disparity between the two countries is not just a matter of aesthetics but also of economic development. Austria has a significantly higher GDP per person, ranking 13th in the world, while Hungary's GDP per person is less than a quarter of Austria's. This vast difference in economic indicators contributes to the divergent aesthetics of the two neighbouring nations.
Historically, the Austria-Hungary Empire had a largely rural population, with wealth and income levels comparable to those of France and the USA in 1870. However, the western areas, particularly around Vienna, excelled in various manufacturing industries, while Hungary became a key player in the industries of the Second Industrial Revolution. This division of labour between the east and west led to rapid economic growth in both parts of the empire by the early 20th century.
Despite the economic growth and development experienced by Hungary, particularly in the late 19th and early 20th centuries, the country continues to struggle with infrastructure and development issues. This has resulted in the gritty aesthetic that characterises many of its cities and villages, in contrast to the more affluent and well-maintained appearance of neighbouring Austria.
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Austria's industrial revolution dominance
Austria's dominance during the first Industrial Revolution can be attributed to several factors. Firstly, Austria had abundant natural resources, particularly iron ore and salt, and a long history of mining. For instance, the Celts had developed underground salt mining to a proto-industrial level long before the Common Era. Additionally, in the late Middle Ages, tens of thousands of miners were extracting silver and copper ore. This provided a solid foundation for industrialization.
Secondly, the construction of the railway system played a crucial role in Austria's industrialization. Starting in the mid-1850s, the Kaiser Ferdinand Northern Railroad provided services from Vienna to Prague, and the "Southern Line" or Südbahn ran via Laibach to Trieste. The railway system facilitated trade and travel, connecting major cities and promoting rapid industrialization around Vienna, Bohemia, and Silesia. By the time Austria and Hungary united in 1867, 6,000 km of lines had been built, with 7,600 km of new lines linking all major cities.
Thirdly, the development of polytechnic schools in Vienna and Prague into technical universities as early as 1815 contributed to the industrialization of the Habsburg Empire. This farsighted act provided the necessary technical skills and expertise for industrialization.
Furthermore, Upper Styria developed into an industrial core region, where Karl Wittgenstein, known as "Austria's Krupp", formed mining and iron-working operations into a powerful cartel. Textile production also flourished, particularly in the Vorarlberg region. Vienna became a centre for manufacturing rail cars and locomotives, with the Rothschilds founding the merchant bank "Credit-Anstalt für Handel und Gewerbe" in 1855.
Lastly, to protect its growing industries, Vienna raised tariffs in the 1870s and 1880s. As a result, Austria's economic growth was strong, with its GNP doubling from 1870 to 1913. This period also saw the emergence of various manufacturing industries in western areas, concentrated mainly around Prague and Vienna.
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Hungary's position in the Second Industrial Revolution
Hungary, as part of the Austro-Hungarian Empire, had a predominantly rural economy before 1870, with about 67% of the workforce employed in agriculture in 1870. However, technological advancements and the emergence of factories, particularly in the 1840s, accelerated industrialization and urbanization. The GNP per capita grew at an impressive rate of approximately 1.76% per year from 1870 to 1913, outperforming countries like Britain, France, and Germany.
The construction of railways played a significant role in Hungary's industrialization. By 1867, when Austria and Hungary united, 6000 km of railway lines had been built, mostly in the more industrialized Austrian regions. This connectivity promoted rapid industrialization around Vienna, Bohemia, and Silesia. Additionally, the invention of the roller mill in the 1860s propelled Hungary to become the world's second-largest exporter of flour after the United States, with Budapest as the leading flour-milling centre.
During the First World War, Hungary's aircraft industry also began to develop, with notable companies such as UFAG Hungarian Aircraft Factory, Hungarian General Aircraft Factory, and Hungarian Lloyd Aircraft contributing to the production of fighter planes, bombers, and reconnaissance aircraft.
However, Hungary faced challenges in achieving balanced economic growth. The focus on heavy industry and neglect of agriculture and consumer goods production led to disparities in development within the Empire. The western areas, particularly around Prague and Vienna, excelled in manufacturing industries, while Hungary specialized in modern sectors of the Second Industrial Revolution. This division of labour between east and west resulted in rapid economic growth for Austria-Hungary as a whole by the early 20th century. Nonetheless, income inequality and emigration, particularly to the United States, remained significant factors.
In summary, Hungary's position in the Second Industrial Revolution was characterized by industrialization, technological advancements, and economic growth. However, regional disparities, income inequality, and a predominantly rural population presented ongoing challenges.
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Frequently asked questions
Austria's Gross Domestic Product (GDP) per person is nearly four times that of Hungary's. In addition, the standard of living in Austria is higher than in Hungary, with better infrastructure and higher-quality public services.
No, when Austria and Hungary united in 1867, Hungary became the world's second-largest exporter of flour after the United States, and Budapest became the world's largest flour-milling centre. However, Austria maintained its dominance in the sectors of the First Industrial Revolution.
The construction of railways in the Austro-Hungarian Empire led to rapid industrialization around Vienna, Bohemia, and Silesia. In addition, Vienna raised tariffs in the 1870s and 1880s to protect its growing industries, resulting in strong economic growth.
While Hungary experienced economic growth, particularly in the late 19th century, it was slower than that of Austria and the rest of Europe. In addition, emigration became a significant factor after 1895, with many people leaving Hungary, primarily for the United States.
