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Why East Germany did not become a new Mezzogiorno

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  • Boltho, Andrea
  • Carlin, Wendy
  • Scaramozzino, Pasquale

Abstract

Economic integration is generally thought to favour convergence in the economic performance of previously separated regions; but this is far from universally true, as the experience of the members of the Eurozone testifies. The paper considers the two sharply contrasting cases of East and West German convergence following reunification and the enduring poverty of the Italian Mezzogiorno since Italian unification a century and a half ago. In both countries, political integration delivers much higher consumption in the lagging relative to the leading region than of per capita GDP. Consumption convergence can be supported by transfers but ‘production’ convergence ultimately requires catch-up in the production of tradeables. The paper demonstrates the radically different performance of the tradeable sector in the two cases, and suggests that this may be the result of differences in labour market flexibility, in investment performance and in the social norms required for the production of complex manufacturing.

Suggested Citation

  • Boltho, Andrea & Carlin, Wendy & Scaramozzino, Pasquale, 2018. "Why East Germany did not become a new Mezzogiorno," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 308-325.
  • Handle: RePEc:eee:jcecon:v:46:y:2018:i:1:p:308-325
    DOI: 10.1016/j.jce.2017.11.004
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    7. Fanti, Lucrezia & Pereira, Marcelo C. & Virgillito, Maria Enrica, 2023. "The North-South divide: Sources of divergence, policies for convergence," Journal of Policy Modeling, Elsevier, vol. 45(2), pages 405-429.
    8. Eder, Christoph & Halla, Martin, 2018. "On the Origin and Composition of the German East-West Population Gap," IZA Discussion Papers 12031, Institute of Labor Economics (IZA).
    9. Angelica Sbardella & Andrea Zaccaria & Luciano Pietronero & Pasquale Scaramozzino, 2021. "Behind the Italian Regional Divide: An Economic Fitness and Complexity Perspective," LEM Papers Series 2021/30, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    10. Angelica Sbardella & Emanuele Pugliese & Andrea Zaccaria & Pasquale Scaramozzino, 2018. "The role of complex analysis in modeling economic growth," Papers 1808.10428, arXiv.org.
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    12. K. Haaf & C.J.M. Kool, 2017. "Determinants of regional growth and convergence in Germany," Working Papers 17-12, Utrecht School of Economics.
    13. Christoph Eder & Martin Halla, 2018. "On the Origin of the German East-West Population Gap," Economics working papers 2018-17, Department of Economics, Johannes Kepler University Linz, Austria.

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    More about this item

    Keywords

    Convergence; Tradeables; Labour market flexibility; Institutional quality;
    All these keywords.

    JEL classification:

    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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