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From socialist showcase to Mezzogiorno? Lessons on the role of technical change from East Germany's post-World War II growth performance

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  • Keller, Wolfgang

Abstract

In this paper we emphasize the contribution of technical change, broadly defined, towards productivity growth in explaining the relative East Germany-West Germany performance during the post-World War II era. We argue that previous work was excessively focused on physical capital investments determining productivity differentials, which consequently led to an overestimation of the East German performance during the Socialist era, and an overly pessimistic assessment of the East German prospects of catching up with West Germany during the post-reunification era. We show, first, that the rates of technical change in the manufacturing industries of East German states were significantly below those in Western states, helping to account for the fact that East Germany was not the socialist showcase for which it was frequently taken before German reunification. Second, we demonstrate that the rates of technical change in the East German states have been considerably higher than those in the West since German reunification. This suggests that the Mezzogiorno prediction for East Germany--that it will stay persistently behind West Germany as does Italy's South relative to its North--, based on an analysis of the need for physical capital accumulation alone, will prove too pessimistic.
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  • Keller, Wolfgang, 2000. "From socialist showcase to Mezzogiorno? Lessons on the role of technical change from East Germany's post-World War II growth performance," Journal of Development Economics, Elsevier, vol. 63(2), pages 485-514, December.
  • Handle: RePEc:eee:deveco:v:63:y:2000:i:2:p:485-514
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    Citations

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    Cited by:

    1. Giovanni Peri & Dieter Urban, 2002. "The Veblen-Gerschenkron Effect of FDI in Mezzogiorno and East Germany," Development Working Papers 164, Centro Studi Luca d'Agliano, University of Milano.
    2. Falko Juessen, 2009. "A distribution dynamics approach to regional GDP convergence in unified Germany," Empirical Economics, Springer, vol. 37(3), pages 627-652, December.
    3. Michael C. Burda & Mark Weder, 2017. "The Economics of German Unification after Twenty-five Years: Lessons for Korea," SFB 649 Discussion Papers SFB649DP2017-009, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    4. Peri, Giovanni & Urban, Dieter, 2006. "Catching-up to foreign technology? Evidence on the "Veblen-Gerschenkron" effect of foreign investments," Regional Science and Urban Economics, Elsevier, vol. 36(1), pages 72-98, January.
    5. Sinn, Hans-Werner, 2002. "Germany's Economic Unification: An Assessment after Ten Years," Review of International Economics, Wiley Blackwell, vol. 10(1), pages 113-128, February.
    6. Noland, Marcus & Robinson, Sherman & Wang, Tao, 2000. "Modeling Korean Unification," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 400-421, June.
    7. Frank Siebern, 2000. "Better LATE? Instrumental Variables Estimation of the Returns to Job Mobility during Transition," German Economic Review, Verein für Socialpolitik, vol. 1(3), pages 335-362, August.
    8. Ray Barrell & Dirk Willem te Velde, 2000. "Catching-up of East German Labour Productivity in the 1990s," German Economic Review, Verein für Socialpolitik, vol. 1(3), pages 271-297, August.
    9. Falko Juessen, 2005. "A distribution dynamics approach to regional income convergence in reunified Germany," ERSA conference papers ersa05p411, European Regional Science Association.

    More about this item

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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