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Does regional redistribution spur growth?

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  • Koetter, Michael
  • Wedow, Michael

Abstract

After the German reunification, interregional subsidies accounted for approximately four percent of gross fixed capital investment in the new federal states. We show that between 1992 and 2005 infrastructure and (small) business aid had a negative net impact on regional economic growth. This suggests that regional redistribution was ineffective, potentially due to a lack of spatial concentration to create growth poles. --

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Bibliographic Info

Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2008,28.

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Date of creation: 2008
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Handle: RePEc:zbw:bubdp1:7567

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Related research

Keywords: Regional growth; redistribution; infrastructure; investment subsidies;

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References

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  1. David Aschauer, 1988. "Is public expenditure productive?," Staff Memoranda 88-7, Federal Reserve Bank of Chicago.
  2. Demurger, Sylvie, 2001. "Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China?," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 95-117, March.
  3. Michael Funke & Annekatrin Niebuhr, 2005. "Threshold Effects and Regional Economic Growth-Evidence from West Germany," Quantitative Macroeconomics Working Papers, Hamburg University, Department of Economics 20503, Hamburg University, Department of Economics.
  4. Brakman, Steven & Garretsen, Harry & Marrewijk, Charles van, 2002. "Locational competition and agglomeration: the role of government spending," CCSO Working Papers, University of Groningen, CCSO Centre for Economic Research 200209, University of Groningen, CCSO Centre for Economic Research.
  5. Ron Martin & Peter Tyler, 2006. "Evaluating the impact of the structural funds on objective 1 regions: An exploratory discussion," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 40(2), pages 201-210.
  6. Reinhold Kosfeld & Hans-Friedrich Eckey & Christian Dreger, 2006. "Regional productivity and income convergence in the unified Germany, 1992-2000," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 40(7), pages 755-767.
  7. Raghuram G. Rajan & Arvind Subramanian, 2005. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," NBER Working Papers 11513, National Bureau of Economic Research, Inc.
  8. Mora, Toni & Vaya, Esther & Surinach, Jordi, 2005. "Specialisation and growth: the detection of European regional convergence clubs," Economics Letters, Elsevier, Elsevier, vol. 86(2), pages 181-185, February.
  9. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
  10. Funke, Michael & Strulik, Holger, 1999. "Regional growth in West Germany: convergence or divergence?," Economic Modelling, Elsevier, Elsevier, vol. 16(4), pages 489-502, December.
  11. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 1-92.
  12. Ravallion, Martin & Jalan, Jyotsna, 1996. "Growth divergence due to spatial externalities," Economics Letters, Elsevier, Elsevier, vol. 53(2), pages 227-232, November.
  13. Cain, Louis P., 1997. "Historical perspective on infrastructure and US economic development," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 27(2), pages 117-138, April.
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Cited by:
  1. Bögenhold, Dieter & Fachinger, Uwe, 2010. "How Diverse is Entrepreneurship? Observations on the social heterogeneity of self-employment in Germany," MPRA Paper 23271, University Library of Munich, Germany.
  2. Mariasole Bann� & Valentina Morandi & Celeste Amorim Varum, 2013. "Public policy for innovation and internationalization: are they worth it?," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 20(10), pages 927-930, July.

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