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Industrial Policy and the East German Productivity Puzzle

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  • Henning Klodt
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    Abstract

    Catching-up of East German productivity to West German levels has completely faded out since the mid-1990s. The remaining productivity gap cannot be attributed to an inferior capital endowment or qualification deficiencies of the East German labor force. Instead, it appears to be the result of an inappropriate design of industrial policy which concentrated on the subsidization of physical capital and largely ignored the advance of human capital- and service-intensive industrial structures. East Germany will have to face another wave of painful structural adjustment when capital-intensive industries are no longer protected from competition by public subsidies. Copyright Verein fü Socialpolitik and Blackwell Publishers Ltd 2000.

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    Bibliographic Info

    Article provided by Verein für Socialpolitik in its journal German Economic Review.

    Volume (Year): 1 (2000)
    Issue (Month): 3 (08)
    Pages: 315-333

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    Handle: RePEc:bla:germec:v:1:y:2000:i:3:p:315-333

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    1. Lorz, Oliver, 1997. "A Bertrand model of wage competition with capital mobility," Economics Letters, Elsevier, vol. 56(3), pages 339-343, November.
    2. Klodt, Henning & Maurer, Rainer & Schimmelpfennig, Axel, 1997. "Tertiarisierung in der deutschen Wirtschaft," Open Access Publications from Kiel Institute for the World Economy 959, Kiel Institute for the World Economy (IfW).
    3. Hans-Werner Sinn, 1995. "Staggering along: wages policy and investment support in East Germany," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 3(4), pages 403-426, December.
    4. Joachim Ragnitz & Siegfried Beer, 1997. "Betriebsgröße und Arbeitsproduktivität im ostdeutschen Verarbeitenden Gewerbe," Wirtschaft im Wandel, Halle Institute for Economic Research, vol. 3(16), pages 11-13.
    5. Begg, David & Portes, Richard, 1992. "Eastern Germany Since Unification: Wage Subsidies Remain a Better Way," CEPR Discussion Papers 730, C.E.P.R. Discussion Papers.
    6. Brenke, Karl & Eickelpasch, Alexander & Postlep, Rolf-Dieter & Gerling, Katja & Sander, Birgit & Schmidt, Klaus-Dieter & Beer, Siegfried & Bergemann, Annette & Komar, Walter & Müller, Ralf & Ragnitz,, 1999. "Gesamtwirtschaftliche und unternehmerische Anpassungsfortschritte in Ostdeutschland: Neunzehnter Bericht," Kiel Discussion Papers 346/347, Kiel Institute for the World Economy (IfW).
    7. Vera Dietrich, 1997. "Kapitalausstattung und Produktivitätsrückstand im ostdeutschen Unternehmenssektor," Wirtschaft im Wandel, Halle Institute for Economic Research, vol. 3(7), pages 5-9.
    8. Jacqueline Rothfels & Gerald Müller & Anita Wölfl, 1998. "Determinanten der Produktivitätslücke in Ostdeutschland - Teil II," Wirtschaft im Wandel, Halle Institute for Economic Research, vol. 4(2), pages 15-21.
    9. Corporate author, 1999. "Gesamtwirtschaftliche und unternehmerische Anpassungsfortschritte in Ostdeutschland: neunzehnter Bericht," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 66(23), pages 419-445.
    10. Gerling, Katja, 1998. "Transfers and transition: The impact of government support on factor demand and production in Eastern Germany," Kiel Working Papers 878, Kiel Institute for the World Economy.
    11. Klodt, Henning, 1996. "West-Ost-Transfers und Strukturprobleme in den neuen Ländern," Open Access Publications from Kiel Institute for the World Economy 1677, Kiel Institute for the World Economy (IfW).
    12. Sinn, Gerlinde & Sinn, Hans-Werner, 1992. "Kaltstart. Volkswirtschaftliche Aspekte der Deutschen Vereinigung," Monograph, Mohr Siebeck, Tübingen, edition 2, number urn:isbn:9783161459429, February.
    13. Jacqueline Rothfels, 1997. "Die ostdeutsche Wirtschaftsstruktur und die Produktivitätslücke," Wirtschaft im Wandel, Halle Institute for Economic Research, vol. 3(13), pages 15-21.
    14. Joachim Ragnitz, 1997. "Zur Produktivitätslücke in Ostdeutschland," Wirtschaft im Wandel, Halle Institute for Economic Research, vol. 3(7), pages 3-4.
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    Cited by:
    1. Beate Schirwitz & Christian Seiler & Klaus Wohlrabe, 2009. "Regionale Konjunkturzyklen in Deutschland – Teil III: Konvergenz," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 62(15), pages 23-32, 08.
    2. Rima Izem & Nicola Fuchs-Schuendeln, 2007. "Explaining the Low Labor Productivity in East Germany - A Spatial Analysis," 2007 Meeting Papers 378, Society for Economic Dynamics.
    3. Kilin F.S., 2003. "Analysis of convergence process of East German economy on the base of a two-region growth model," GE, Growth, Math methods 0304002, EconWPA.
    4. Snower, Dennis J. & Merkl, Christian, 2006. "The Caring Hand that Cripples: The East German Labor Market After Reunification (Detailed Version)," IZA Discussion Papers 2066, Institute for the Study of Labor (IZA).
    5. repec:iab:iabzaf:v:38:i:4:p:510-530 is not listed on IDEAS
    6. Werner Smolny, 2012. "Cyclical Adjustment, Capital-labor Substitution and Total Factor Productivity Convergence – East Germany After Unification," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 232(4), pages 445-459, July.
    7. Smolny, Werner, 2010. "Dynamic adjustment and long-run equilibria: Panel data estimates for the East German states," Economic Modelling, Elsevier, vol. 27(5), pages 1223-1229, September.
    8. Kitterer, Wolfgang, 2002. "Die Ausgestaltung der Mittelzuweisungen im Solidarpakt II," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 02-1, University of Cologne, FiFo Institute for Public Economics.
    9. Erich Gundlach, 2003. "Growth Effects of EU Membership: The Case of East Germany," Empirica, Springer, vol. 30(3), pages 237-270, September.
    10. Dennis J. Snower & Christian Merkl, 2006. "The Caring Hand that Cripples: The East German Labor Market after Reunification," American Economic Review, American Economic Association, vol. 96(2), pages 375-382, May.
    11. Czarnitzki, Dirk, 2003. "Extent and Evolution of the Productivity Gap in Eastern Germany," ZEW Discussion Papers 03-25, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. Mallok, Jörn, 2005. "Produktivitätsentwicklung in ostdeutschen Industriebetrieben : Ergebnisse einer Fallstudienanalyse (1992-2002) (Development of productivity in eastern German industrial enterprises : results of a cas," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(4), pages 510-530.
    13. Stefan Arent & Alexander Eck & Oskar Krohmer & Robert Lehmann & Wolfgang Nagl & Joachim Ragnitz & Marcel Thum, 2011. "Wirtschaftliche Entwicklung Sachsens im Ländervergleich: Bestandsaufnahme und Perspektiven: Gutachten im Auftrag der Sächsischen Staatskanzlei," ifo Dresden Studien, Ifo Institute for Economic Research at the University of Munich, number 59, October.

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