602Chapter 30The economic evolution of the twentieth century
also requires a global perspective on European indus-
trial might. On the eve of World War I, nearly 58 per-
cent of the world’s total industrial production came
from Europe, with Britain holding a global share of 14
percent and Germany 15 percent. Europe still produced
more than 50 percent of the world’s industrial output
on the eve of World War II. By 1980 European produc-
tion had fallen to 44 percent, and Japanese production
(9.1 percent) nearly equaled British (4.0 percent) and
German production (5.3 percent) combined. The
United States, which represented 32 percent of global
production in 1913, still accounted for 31.5 percent in
1980, although that stable share is distorted by the
post–World War II rise to nearly 45 percent of global
production (1953) while Europe had still not recovered
from wartime devastation.
The relative decline in European industrial output
in the late twentieth century raises several related is-
sues. The European economy came to be dominated by
a new sector, neither industrial nor agricultural. In the
course of this transition to a postindustrial economy,
Europe (and the United States) deindustrialized their
economies to a significant degree, allowing uncompeti-
tive industries to close and many forms of traditional
industrial production to go overseas (especially to Asian
countries) where production costs (especially labor)
were much lower. By the 1990s many industrial and
manufacturing sectors (including such traditional mea-
sures of economic might as steel and textiles) existed in
which Western countries could import goods cheaper
than manufacturing them. No image of the European
economy of 2000 would have been more startling to
Europeans of 1900 than the contrast between the pow-
erful look of the smokestacks of heavy industry and the
stark reality of deindustrialization (see illustration 30.2).The Service Economy
By the end of the nineteenth century, the focus on in-
dustrial production no longer presented a complete pic-
ture of European economies and social structures. A
third sector of the economy had emerged, and by the
second half of the twentieth century it had grown to be
as important as industrial employment. By 1980 this
third sector, called the service sector, dominated the
economy of Western Europe (see table 30.6). In 1910
industry employed 41 percent of the population com-
pared with 30 percent for agriculture. In 1980 the ser-
vice economy employed 55 percent of the labor force
of Western Europe while industry had declined to 39
percent and agriculture took only 6 percent. In 1910
Europeans had expected a continually expanding indus-
trialization; in 1980 Europe had a postindustrial econ-
omy. The service sector did not dominate any East
European economy at the time of the revolutions ofPercentage of British industrial output in 1900
Country 1913 1938 1953 1980
Britain 127 181 258 441
France 57 7 498 362
Germany 138 21 422 47 47
West Germany 180 590
East Germany 44 157
Italy 23 46 71 319
Spain 11 1 422 156
Sweden 9 21 28 83
Soviet Union n.a. 152 328 1630
Source: Adapted from data in Paul Bairoch, “International Industrialization Levels from 1750 to 1980,” Journal of European Economic History,11 (1982),
pp. 299, 331; and Gerold Ambrosius and William H. Hubbard, A Social and Economic History of Twentieth Century Europe(Cambridge, Mass.: Harvard University
Press, 1989), p. 187.
n.a. Not availableTABLE 30.5The Growth of European Industrial Output, 1913–80