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Will East Germany Become a New Mezzogiorno?

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Author Info
Boltho, Andrea
Carlin, Wendy
Scaramozzino, Pasquale

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Abstract

Despite massive regional policy efforts, GDP per capita in Southern Italy has only briefly converged on Northern Italian levels (during the 1960s). Failure since then is associated with a policy switch from investment towards income maintenance, with reduced wage sensitivity to regional labour market conditions and with increases in rent-seeking opportunities and corruption. East Germany’s early experience of rapid wage and income, but not productivity, convergence raised fears that a Mezzogiorno scenario could be repeated. Since then, however, investment has been successfully encouraged, wage setting has become more flexible and productivity growth has risen. Given a more favourable non-economic environment as well, the prospects for East German convergence are now more promising.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1256.

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Date of creation: Feb 1996
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Handle: RePEc:cpr:ceprdp:1256

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Related research
Keywords: Convergence; Regional Development; Regional Economic Policy;

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Find related papers by JEL classification:
O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
R58 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - Regional Development Policy

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  2. Hans-Werner Sinn & Frank Westermann, 2000. "Two Mezzogiornos," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  3. Wolfgang Keller, 1997. "From Socialist Showcase to Mezzogiorno? Lessons on the Role of Technical Change from East Germany's Post-World War II Growth Performance," NBER Working Papers 6079, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Adriana Di Liberto & James Symons, 2001. "Education and Italian Regional Development," CEP Discussion Papers dp0496, Centre for Economic Performance, LSE. [Downloadable!]
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  5. Adriana Di Liberto & Francesco Pigliaru & Roberto Mura, 2008. "How to measure the unobservable: a panel technique for the analysis of TFP convergence," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 343-368, April. [Downloadable!] (restricted)
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  6. Ugo Fratesi, 2008. "Regional policy from a supra-regional perspective," The Annals of Regional Science, Springer, vol. 42(3), pages 681-703, September. [Downloadable!] (restricted)
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  7. Erich Gundlach, 2003. "Growth Effects of EU Membership: The Case of East Germany," Empirica, Springer, vol. 30(3), pages 237-270, September. [Downloadable!] (restricted)
  8. Luigi Bonatti, 1999. "Growth, real interest, employment and wage determination," Department of Economics Working Papers 9907, Department of Economics, University of Trento, Italia. [Downloadable!]
  9. Fabio Canova & Morten Ravn, 2000. "The Macroeconomic Effects of German Unification: Real Adjustments and the Welfare State," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(3), pages 423-460, July. [Downloadable!] (restricted)
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  10. Sinn, Hans-Werner, 2000. "Germany's Economic Unification. An Assessment after Ten Years," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  11. Shankar, Raja & Shah, Anwar, 2009. "Lessons from European Union policies for regional development," Policy Research Working Paper Series 4977, The World Bank. [Downloadable!]
  12. Rota, Mauro, 2009. "Long Run Loans and Industrial Policy in Italy in the 1960s," MPRA Paper 17189, University Library of Munich, Germany. [Downloadable!]
  13. Isabel Cortes-Jimenez, 2006. "Tourism and Economic Growth At Regional Level: the Cases of Spain and Italy," ERSA conference papers ersa06p61, European Regional Science Association. [Downloadable!]
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