Key Points
- Regions in Germany that adopted steam engine technology early still earn about 4.3% higher wages and host more innovation than others.
- Early industrialisation helped build skilled workforces and patent activity, creating self-reinforcing economic advantages.
- Researchers say lessons from steam technology adoption may apply to future waves like AI, shaping long-term regional growth.
A new study shows that early adoption of steam engine technology in parts of Germany continues to influence regional economic outcomes more than 150 years after the Industrial Revolution. Researchers found that areas which embraced steam power early now display higher average wages, a larger share of technically trained workers and more active innovation compared with regions that lagged in adoption.
The research, led by the ROCKWOOL Foundation Berlin (RFBerlin), analysed historical industrial data alongside modern economic indicators to trace the long-lasting effects of early technological investment. Regions with a history of steam engine use exhibit wages about 4.3% higher today than elsewhere in Germany, a gap linked to persistent advantages in skills and productivity.
Study authors say the steam engine did more than power factories — it helped build human capital and innovation ecosystems that reinforced each other. Areas that industrialised early attracted skilled workers, university-educated talent and firms devoted to technical development, creating a self-reinforcing economic cycle that endured across generations.
Professor Christian Dustmann, director of RFBerlin, noted that the broader effects of steam technology extended beyond immediate economic gains. The initial investment in mechanisation shaped education patterns, workforce composition and patent activity, giving historically industrial regions a competitive edge well into the modern era.
The results of this century-long link between technology and economic strength carry lessons for today’s policymakers. Researchers suggest that rapid and widespread adoption of new technologies such as artificial intelligence (AI) could similarly influence regional prosperity in the decades ahead.
Sascha Becker, one of the study’s leaders, said the pattern of early adoption leading to structural economic advantages may repeat with modern innovations. Regions that build infrastructure, cultivate skilled workforces and encourage innovation around emerging technologies could secure long-term benefits much like early steam adopters did.
Economists say the findings underscore how historical choices about technology investment can create deeply entrenched economic divides. These long-term legacy effects make it harder for late-industrialising areas to catch up, even when economic conditions change.
The study ties historical industrialisation to contemporary labour market and innovation outcomes, adding to broader research on persistent regional inequality. It highlights the importance of skill development and technology diffusion in determining which regions prosper over time, offering a long-view perspective on how technological waves shape economic geography.
