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A prerequisite for a lasting upswing in east Germany: more equipment and plant investment

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  • Albert Müller

Abstract

For the past two years economic growth in eastern and western Germany has diverged. A primary reason is the normalisation in the construction industry in east Germany, after the unification building boom. Although investment rates are declining, construction's share of the economy in east Germany is still too high to provide sufficient growth impulses for further catching-up. For a self-supporting and sustainable upswing, however, a much greater plant and equipment investment dynamic is necessary. This, however, has been under the west German level since 1998, in terms of per-capital labour force, although the government has provided favourable conditions and planning security for investors. With this weakness, the chances of a rapid and lasting regeneration of the east German economy have diminished.

Suggested Citation

  • Albert Müller, 2002. "A prerequisite for a lasting upswing in east Germany: more equipment and plant investment," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 55(05), pages 27-30, March.
    • Handle: RePEc:ces:ifosdt:v:55:y:2002:i:05:p:27-30
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    References listed on IDEAS

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    1. Peter Jäckel, 2002. "Verarbeitendes Gewerbe der neuen Bundesländer : nach sechs Jahren mit rückläufigen Investitionen stabiles Volumen 2001 und ein spürbarer Zuwachs 2002 erwartet," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(01), pages .32-37, September.
    2. Albert Müller, 2001. "Improved production opportunities and unchanged sales problems - time is running out for east Germany," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(03), pages 30-40, March.
    3. Hans-Werner Sinn, 2000. "Zehn Jahre deutsche Wiedervereinigung - Ein Kommentar zur Lage der neuen Länder," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 53(26-27), pages 10-22, November.
    4. Hans-Werner Sinn, 2000. "Ten years of German unification - a commentary on the situation in east Germany," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 53(26), pages 10-22, November.
    5. Peter Jäckel, 2002. "Verarbeitendes Gewerbe der neuen Bundesländer : nach sechs Jahren mit rückläufigen Investitionen stabiles Volumen 2001 und ein spürbarer Zuwachs 2002 erwartet," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(01), pages 32-37, 09.
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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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