A diverse group of people from different ethnic backgrounds working together in a bustling 18th-century Berlin textile market, symbolizing economic prosperity and cultural integration.

Diversity Pays: How 18th-Century Berlin Prospered by Welcoming Immigrants

Rhea Morgan in Business & Economy June 2025 • 4 min read.

"Unlocking the secrets of economic growth: A historical look at how Berlin's embrace of diverse cultures fueled its rise to prominence."

In an era marked by religious persecution and forced migrations, 18th-century Berlin emerged as a unique case study in the benefits of diversity. While many societies viewed minority groups with suspicion and hostility, Prussian rulers actively sought to attract skilled immigrants, transforming Berlin into a vibrant economic hub. This approach not only provided refuge for the persecuted but also laid the foundation for sustained economic growth.

Recent research, drawing on detailed city-district panel data from this period, sheds light on the remarkable relationship between ethnic diversity and economic activity in Berlin. By examining the impact of Huguenots, Jews, Bohemians, and native Prussians on textile production, the study reveals how the combination of diverse skills and perspectives fostered innovation and increased productivity.

The findings challenge conventional wisdom about the potential drawbacks of diversity, such as increased conflict and competition for resources. Instead, they highlight the power of complementarity, where different ethnic groups contribute unique talents and expertise, creating a whole that is greater than the sum of its parts. This historical example offers valuable lessons for contemporary policymakers seeking to promote inclusive economic growth.

Berlin's Ingenious Immigration Strategy: Refuge and Riches

A diverse group of people from different ethnic backgrounds working together in a bustling 18th-century Berlin textile market, symbolizing economic prosperity and cultural integration.

Following the devastation of the Thirty Years' War (1618-1648), Brandenburg-Prussia faced severe depopulation and economic hardship. To revitalize the region, Prussian rulers adopted a policy of religious tolerance, actively inviting persecuted minorities from across Europe to settle within their borders. This bold strategy attracted a diverse influx of skilled workers, entrepreneurs, and intellectuals, transforming Berlin into a melting pot of cultures and ideas.

Among the most prominent groups to arrive were the Huguenots, French Protestants fleeing religious persecution in France. Renowned for their expertise in textile manufacturing, the Huguenots brought with them advanced techniques and entrepreneurial spirit, revolutionizing the Prussian textile industry. Jewish communities, facing discrimination elsewhere, also found refuge in Berlin, contributing their skills in trade, finance, and craftsmanship.

Huguenots: Skilled textile manufacturers who introduced new techniques and boosted production.
Jews: Merchants and traders who facilitated commerce and access to wider markets.
Bohemians: Weavers and craftspeople who diversified the city's manufacturing base.
Native Prussians: Provided local knowledge, infrastructure, and a welcoming environment.

By strategically attracting and integrating these diverse groups, Berlin's rulers fostered a dynamic environment of innovation and economic growth. The city's transformation from a struggling backwater to a thriving center of commerce and culture serves as a testament to the power of diversity.

Lessons from Berlin: Embracing Diversity for Economic Prosperity

The story of 18th-century Berlin offers valuable lessons for today's world, where migration and diversity are increasingly important issues. By embracing religious tolerance, attracting skilled immigrants, and fostering an environment of inclusivity, Berlin transformed itself into a thriving economic and cultural center. This historical example demonstrates that diversity is not just a social good but also a powerful engine for economic prosperity. As societies grapple with the challenges of globalization and demographic change, the lessons from Berlin can serve as a guide for building more inclusive and prosperous communities.

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This article is based on research published under:

DOI-LINK: 10.1016/j.eeh.2018.10.001, Alternate LINK

Title: Diasporas, Diversity, And Economic Activity: Evidence From 18Th-Century Berlin

Subject: Economics and Econometrics

Journal: Explorations in Economic History

Publisher: Elsevier BV

Authors: Erik Hornung

Published: 2019-07-01

Everything You Need To Know

How did 18th-century Berlin transform from a struggling city to a thriving economic hub?

In the 18th century, Berlin's transformation was driven by its rulers' strategic embrace of diversity. Following the Thirty Years' War, the city was depopulated and economically challenged. To revitalize Berlin, Prussian rulers implemented religious tolerance and actively invited skilled immigrants, including Huguenots, Jews, and Bohemians. These groups contributed unique skills: the Huguenots excelled in textile manufacturing, the Jews in trade and finance, and the Bohemians in weaving. This influx of diverse talent, combined with the native Prussians' local knowledge, infrastructure, and a welcoming environment, fostered innovation, increased productivity, and turned Berlin into a vibrant center of commerce and culture.

What role did the Huguenots play in the economic development of 18th-century Berlin?

The Huguenots, French Protestants fleeing religious persecution, were crucial to Berlin's economic development. They were renowned for their expertise in textile manufacturing, bringing advanced techniques and an entrepreneurial spirit to the city. Their skills revolutionized the Prussian textile industry, significantly boosting production and contributing to the overall economic growth of Berlin. Their arrival was a direct result of the Prussian rulers' policy of religious tolerance, which actively sought to attract skilled immigrants.

How did the Prussian rulers' policies affect the city's economic growth in the 18th century?

Prussian rulers played a pivotal role by adopting policies that directly fostered economic growth. Their strategy involved religious tolerance, which attracted persecuted minorities from across Europe, and actively inviting skilled immigrants. These immigrants, including Huguenots, Jews, and Bohemians, brought diverse skills and perspectives that created a dynamic environment of innovation. This environment, in turn, led to increased productivity and transformed Berlin into a thriving center of commerce and culture.

What specific skills did the different ethnic groups, such as Huguenots, Jews, Bohemians, and native Prussians, contribute to Berlin's economy?

Each group contributed unique skills that collectively fueled Berlin's economic prosperity. The Huguenots, with their expertise in textile manufacturing, introduced advanced techniques and entrepreneurial spirit. Jewish communities brought skills in trade, finance, and craftsmanship, facilitating commerce and access to wider markets. Bohemians, as weavers and craftspeople, diversified the city's manufacturing base. The native Prussians provided local knowledge, infrastructure, and a welcoming environment. This combination of skills and perspectives created a powerful synergy, making Berlin greater than the sum of its parts.

What lessons can contemporary policymakers learn from 18th-century Berlin's approach to immigration and diversity for promoting economic growth?

Contemporary policymakers can draw several key lessons from 18th-century Berlin. The city's success highlights the benefits of embracing religious tolerance, attracting skilled immigrants, and fostering an inclusive environment. The historical example demonstrates that diversity is a powerful engine for economic prosperity, challenging the conventional wisdom that diversity leads to conflict. By strategically integrating diverse groups, policymakers can promote innovation, increase productivity, and create more inclusive and prosperous communities. The findings suggest that embracing complementarity, where different ethnic groups contribute unique talents and expertise, is crucial for sustained economic growth.