Industrial Policy and the East German Productivity Puzzle
AbstractCatching-up of East German productivity to West German levels has completely faded out since the mid l990s. The remaining productivity gap cannot be attributed to an inferior capital endowment. Instead, it appears to be the result of an inappropriate design of industrial policy which fostered the specialization of East German industry on capital intensive smoke-stack industries. These industries are absorbing a large share of factor inputs, whereas their contribution to aggregate output is rather limited. East Germany will have to face, therefore, another wave of painful structural adjustment when public subsidies will further be reduced.
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 943.
Length: 27 pages
Date of creation: Aug 1999
Date of revision:
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
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