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Business environment and enterprise behaviour in East Germany compared to West Germany and central Europe

Author

Listed:
  • Libor Krkoska

    (European Bank for Reconstruction and Development)

  • Katrin Robeck

    (European Bank for Reconstruction and Development)

Abstract

This paper examines institutional differences between the former East and West Germany and four central European transition countries (the Czech Republic, Hungary, Poland and the Slovak Republic). Using enterprise survey data we show that the quality of both formal and informal institutions in East Germany still differs from West Germany. In addition, central European transition countries are shown to have closed the gap in institutional quality with East Germany in many areas. We also show that enterprises in the central European transition countries have compensated for country level institutional deficiencies by focusing on company-level innovation and investment in human capital. Meanwhile, East German enterprises report investments in new products and processes as well as in skills well below the level of not only West Germany but also the central European transition countries.

Suggested Citation

  • Libor Krkoska & Katrin Robeck, 2007. "Business environment and enterprise behaviour in East Germany compared to West Germany and central Europe," Working Papers 102, European Bank for Reconstruction and Development, Office of the Chief Economist.
    • Handle: RePEc:ebd:wpaper:102
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    More about this item

    Keywords

    institutions; business environment; enterprise behaviour; transition; East Germany; central Europe;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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