Fixed-price contracts, learning, and outsourcing: explaining the continuous growth of output and labour productivity in the German aircraft industry during the Second World War1

Abstract

In this article it is claimed that, at least in the aircraft industry, the development of German armament production and productivity was much more continuous than Wagenfuhr's armament index and both the Blitzkrieg thesis and the inefficiency thesis suggest. In order to prove this new thesis of continuity, we show on the basis of firm-level data, firstly, that investment in production capacities had already started before the war and was especially high in the early phase of the war, and secondly, that the regulatory setting of aircraft production management was rather constant and was not dramatically changed after 1941. In addition, we demonstrate that the driving forces of productivity growth were primarily learning-by-doing and outsourcing, the latter being generally neglected by economic historians.