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Industry Concentration and Regional Innovative Performance – Empirical Evidence for Eastern Germany

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  • Christoph Hornych
  • Michael Schwartz

Abstract

Regarding technological innovativeness, the transformed economy of the former German Democratic Republic (GDR) clearly lags behind the Western part of the country. To face this weakness, a broad mixture of policy measures was carried out in recent years. Particular attention is drawn to the development of industry concentrations and economic ‘clusters’. However, little is known about the effectiveness of these policy measures regarding how industry concentrations in fact promote innovative performance in Eastern Germany. The present study tries to fill this gap by analyzing the relationship between industry concentration in Eastern Germany and regional innovative performance. Our empirical analysis is based upon the number of patent applications of 22 manufacturing industries in 22 Eastern German planning regions. The estimated regression models indicate an inverted U-shaped relationship between the degree of industry concentration and innovative performance. An exceedingly high degree of industry concentration in one region hampers regional innovative output. We discuss policy implications of our findings and give recommendations for future refinement of ‘cluster’-supporting policy schemes in Eastern Germany.

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Bibliographic Info

Paper provided by Halle Institute for Economic Research in its series IWH Discussion Papers with number 8.

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Date of creation: Apr 2009
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Handle: RePEc:iwh:dispap:8-09

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Keywords: industry concentration; agglomeration; specialization; cluster; innovation; patents; east germany;

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  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
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  7. repec:fth:harver:1473 is not listed on IDEAS
  8. Ulrich Schmoch, 1999. "Impact of international patent applications on patent indicators," Research Evaluation, Oxford University Press, vol. 8(2), pages 119-131, August.
  9. Paul Almeida & Bruce Kogut, 1999. "Localization of Knowledge and the Mobility of Engineers in Regional Networks," Management Science, INFORMS, vol. 45(7), pages 905-917, July.
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Cited by:
  1. Christoph Hornych & Matthias Brachert, 2010. "Determinanten der Vernetzung von Unternehmen der deutschen Photovoltaik-Industrie," IWH Discussion Papers 20, Halle Institute for Economic Research.

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