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

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  • Schwartz, Michael
  • Hornych, Christoph

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 Ushaped 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 clustersupporting policy schemes in Eastern Germany.

Suggested Citation

  • Schwartz, Michael & Hornych, Christoph, 2009. "Industry Concentration and Regional Innovative Performance – Empirical Evidence for Eastern Germany," IWH Discussion Papers 8/2009, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:iwh-8-09
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    Cited by:

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    2. Zhangqi Zhong & Lingyun He, 2022. "Macro-Regional Economic Structural Change Driven by Micro-founded Technological Innovation Diffusion: An Agent-Based Computational Economic Modeling Approach," Computational Economics, Springer;Society for Computational Economics, vol. 59(2), pages 471-525, February.
    3. Schwartz, Michael & Peglow, Francois & Fritsch, Michael & Günther, Jutta, 2010. "What Determines the Innovative Success of Subsidized Collaborative R&D Projects? – Project-Level Evidence from Germany –," IWH Discussion Papers 7/2010, Halle Institute for Economic Research (IWH).
    4. Zhangqi, Zhong & Zhuli, Chen & Lingyun, He, 2022. "Technological innovation, industrial structural change and carbon emission transferring via trade-------An agent-based modeling approach," Technovation, Elsevier, vol. 110(C).
    5. Illy, Annette & Hornych, Christoph & Schwartz, Michael & Rosenfeld, Martin T. W., 2009. "Urban Growth in Germany – The Impact of Localization and Urbanization Economies," IWH Discussion Papers 19/2009, Halle Institute for Economic Research (IWH).
    6. Hornych, Christoph & Brachert, Matthias, 2010. "Determinanten der Vernetzung von Unternehmen der deutschen Photovoltaik-Industrie," IWH Discussion Papers 20/2010, Halle Institute for Economic Research (IWH).
    7. Don Jyh-Fu Jeng & Artur Pak, 2016. "The variable effects of dynamic capability by firm size: the interaction of innovation and marketing capabilities in competitive industries," International Entrepreneurship and Management Journal, Springer, vol. 12(1), pages 115-130, March.
    8. Bischoff, Thore Sören & Hipp, Ann & Runst, Petrik, 2022. "Firm innovation and generalized trust as a regional resource," ifh Working Papers 32/2022, Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh).

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    More about this item

    Keywords

    Industry concentration; Agglomeration; Specialization; Cluster; Innovation; Patents; East Germany;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics

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