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How could the following be possible and what does it mean for the 20th century:
North German Federation circa 1866 OTL including Luxembourg

South German Federation (Habsburg empire) including Alsace-Lorraine, Baden, Württemberg, Bavaria, Austria (including South Tyrol, Slovenia, and Burgenland with Pressburg-Sopron), and the Czech Republic.

Hungary (including everything in the Hungarian half of the Dual Monarchy with Bosnia-Herzogovina).

Poland (including everything in Congress Poland and Austrian Galicia)

What would the economic development of these countries look like by the 20th century and what would their relations be?

Look here to get a basic idea of what I mean:
http://www.thebreman.org/exhibitions/online/1000kids/North_German_Confederation.png
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