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Why East Germany did not become a new Mezzogiorno

Author

Listed:
  • Andrea Boltho

    (Magdalen College, University of Oxford)

  • Wendy Carlin

    (University College London and CEPR)

  • Pasquale Scaramozzino

    (SOAS, University of London and Università degli Studi di Roma Tor Vergata)

Abstract

In an earlier paper (Journal of Comparative Economics, 1997) the authors argued, against the conventional wisdom of the time, that East Germany was unlikely to follow a development path similar to that of the Italian Mezzogiorno. This paper revisits the issue some 25 years after German reunification. Statistical tests show that the absence of income per capita convergence between South and North that has characterized Italy since the war, continued over the last two or more decades. Germany, on the other hand, has, over the same period, seen significant income convergence between East and West. The main explanations that are provided for such contrasting outcomes stress differences between the two countries (and within the two countries) in investment performance, in labour market flexibility, and, in particular, in developments in the tradeable sector whose performance in East Germany has been much superior to that of the Mezzogiorno. These differences, in turn, are linked to very different standards of institutional quality and governance which are almost certainly rooted in the two “poor” regions’ longer-run history.

Suggested Citation

  • Andrea Boltho & Wendy Carlin & Pasquale Scaramozzino, 2016. "Why East Germany did not become a new Mezzogiorno," a/ Working Papers Series 1603, Italian Association for the Study of Economic Asymmetries, Rome (Italy).
  • Handle: RePEc:ais:wpaper:1603
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    2. Amitrajeet A. Batabyal & Peter Nijkamp, 2019. "The magnification of a lagging region’s initial economic disadvantages on the balanced growth path," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 719-730, October.
    3. Riccardo Crescenzi & Mara Giua, 2020. "One or many Cohesion Policies of the European Union? On the differential economic impacts of Cohesion Policy across member states," Regional Studies, Taylor & Francis Journals, vol. 54(1), pages 10-20, January.
    4. Michał Myck & Mateusz Najsztub, 2020. "Implications of the Polish 1999 administrative reform for regional socio‐economic development," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 28(4), pages 559-579, October.
    5. Nadia von Jacobi, 2021. "Comparing Institutional Textures between Germany and Italy with LAU level data," DEM Working Papers 2021/15, Department of Economics and Management.
    6. Gioacchino Fazio & Francesca Giambona & Erasmo Vassallo & Elli Vassiliadis, 2018. "A Measure of Trust: The Italian Regional Divide in a Latent Class Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 140(1), pages 209-242, November.
    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.
    11. Süssmuth, Bernd & Gawellek, Bastian & Koenings, Fabian, 2021. "Economics education, childhood socialization, and the transmission of allocation preferences," International Review of Economics Education, Elsevier, vol. 38(C).
    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

    East Germany; Mezzogiorno; Investment performance; Labour market; Flexibility; Social capital; Competitiveness; Economic complexity.;
    All these keywords.

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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