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The Two Germanies: Information Technology and Economic Divergence, 1949-1989

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  • Ulrich Blum
  • Leonard Dudley

Abstract

Post reunification estimates of East German per capita income were barely one-half the officially reported level. This paper tries to explain this discrepancy and to account for the implied postwar economic divergence between the two Germanies. The statistical discrepancy is attributed to a deterioration in the quality of East German production that coincided with the introduction of information technologies. Institutional arrangements were not allowed to adapt and became inefficient. Economic divergence is explained with a model of collusion in which the East German regime failed to make the necessary structural adjustment.

Suggested Citation

  • Ulrich Blum & Leonard Dudley, 1999. "The Two Germanies: Information Technology and Economic Divergence, 1949-1989," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 710-710, December.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(199912)155:4_710:ttgita_2.0.tx_2-a
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    Citations

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    Cited by:

    1. Bischoff, Ivo, 2002. "Efficiency-enhancing effects of private and collective enterprises in transitional China," Discussion Papers 9, Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU).
    2. Blum, Ulrich, 2001. "Borders matter!: Regional integration in Europe and North America," Dresden Discussion Paper Series in Economics 08/01, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    3. Blum Ulrich & Dudley Leonard, 2000. "Blood, Sweat, and Tears: The Rise and Decline of the East German Economy, 1949–1988 / Blut, Schweiß, Tränen: Aufstieg und Niedergang der ostdeutschen Wirtschaft, 1949–1988," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(4), pages 438-452, August.
    4. Blum, Ulrich, 2011. "An Economic Life in Vain − Path Dependence and East Germany’s Pre- and Post-Unification Economic Stagnation," IWH Discussion Papers 10/2011, Halle Institute for Economic Research (IWH).
    5. Blum, Ulrich, 2011. "Can Korea Learn from German Unification?," IWH Discussion Papers 3/2011, Halle Institute for Economic Research (IWH).

    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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