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The Costs of Remoteness: Evidence from German Division and Reunification

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Author Info
Stephen Redding
Daniel M. Sturm

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Abstract

This paper exploits the division of Germany after the Second World War and the reunificationof East and West Germany in 1990 as a natural experiment to provide evidenceof the importance of market access for economic development. In line with a standard neweconomic geography model, we find that following division cities in West Germany that wereclose to the new border between East and West Germany experienced a substantial decline inpopulation growth relative to other West German cities. We provide several pieces of evidencethat the decline of the border cities can be entirely accounted for by their loss in market accessand is neither driven by differences in industrial structure nor differences in the degree of warrelated destruction. Finally, we also find some first evidence of a recovery of the border citiesafter the re-unification of East and West Germany.

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Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Political Economy and Public Policy Paper Series with number 11.

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Date of creation: Aug 2005
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Handle: RePEc:cep:stipep:11

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Related research
Keywords: Market Access; Economic Geography; German Division; German Reunification;

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
N94 - Economic History - - Regional and Urban History - - - Europe: 1913-
O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses

References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Redding, Stephen J & Sturm, Daniel M & Wolf, Nikolaus, 2007. "History and Industry Location: Evidence from German Airports," CEPR Discussion Papers 6345, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Stephen Redding, 2009. "Economic Geography: A Review of the Theoretical and Empirical Literature," CEP Discussion Papers dp0904, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  3. Wolf, Nikolaus, 2008. "Was Germany ever united? Evidence from Intra- and International Trade 1885 – 1933," The Warwick Economics Research Paper Series (TWERPS) 871, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  4. Candau, Fabien, 2006. "The Spatial and Public Economics of Regions, a Theoretical and Empirical Survey," MPRA Paper 1153, University Library of Munich, Germany. [Downloadable!]
  5. Gabriel Ahlfeldt, 2007. "If Alonso Was Right: Accessibility as Determinant for Attractiveness of Urban Location," Working Papers 012, Chair for Economic Policy, University of Hamburg. [Downloadable!]
  6. Bernd Süßmuth & Malte Heyne & Wolfgang Maennig, 2009. "Induced Civic Pride and Integration," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  7. Maarten Bosker & Steven Brakman & Harry Garretsen & Marc Schramm, 2006. "A Century of Shocks: The Evolution of the German City Size Distribution 1925 – 1999," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  8. Ahlfeldt, Gabriel M. & Wendlan, Nicolai, 2008. "Spatial Determinants of CBD Emergence: A Micro-level Case Study on Berlin∗," MPRA Paper 11572, University Library of Munich, Germany. [Downloadable!]
  9. Nicola Fuchs-Schündeln & Rima Izem, 2007. "Explaining the Low Labor Productivity in East Germany. A Spatial Analysis," Kiel Working Papers 1307, Kiel Institute for the World Economy. [Downloadable!]
  10. Stephen Redding, 2009. "The Empirics of New Economic Geography," CEP Discussion Papers dp0925, Centre for Economic Performance, LSE. [Downloadable!]
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  11. Ahlfeldt, Gabriel M., 2009. "The train has left the station: Do markets value intra-city access to inter-city rail connections?," MPRA Paper 13900, University Library of Munich, Germany. [Downloadable!]
  12. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon & Sébastien Roux, 2007. "Estimating Agglomeration Economies with History, Geology, and Worker Effects," NBER Chapters, in: The Economics of Agglomeration National Bureau of Economic Research, Inc. [Downloadable!]
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  13. Gabriel Ahlfeldt & Wolfgang Maennig, 2009. "Impact of Non-Smoking Ordinances on Hospitality Revenues: The Case of Germany," Working Papers 026, Chair for Economic Policy, University of Hamburg. [Downloadable!]
  14. Claudia M. Buch & Farid Toubal, 2007. "Openness and Growth: The Long Shadow of the Berlin Wall," IAW Discussion Papers 31, Institut für Angewandte Wirtschaftsforschung (IAW). [Downloadable!]
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  15. Maarten Bosker & Steven Brakman & Harry Garretsen & Marc Schramm, 2005. "Looking for Multiple Equilibria when Geography Matters: German City Growth and the WWII Shock," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  16. Toshihiro Okubo & Pierre M. Picard & Jacques-François Thisse, 2008. "The spatial selection of heterogeneous firms," Discussion Paper Series 229, Research Institute for Economics & Business Administration, Kobe University. [Downloadable!]
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