On the competitive position of Eastern German manufacturing: Why is catching-up so slow?
AbstractSeven years after the transition from plan to market, it is hard to summon up much enthusiasm for the results of active restructuring of the eastern German economy. Although companies have made considerable efforts to reach the efficiency level of their western German counterparts, the gap is still large. In our paper, we provide a selective and interpretative account of the restructuring process in eastern German manufacturing. We start with modelling some economic relations which can be considered crucial in the restructuring process: ownership status and overall performance, sectoral and regional specialization, gross output and value added, investment and productivity, and wages and employment. In search of adjustment failures, we examine these relations by comparing the performance of eastern German with that of western German enterprises. Finally, we discuss the key policy question of how to overcome the difficulties. Without an about-face in wage policy, it will be difficult to shift the balance from wage convergence to efficiency convergence.
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 825.
Date of creation: 1997
Date of revision:
Find related papers by JEL classification:
- P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
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- 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.
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