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Emerging East-West corporate networks in Central European border regions: Some theoretical arguments and stylized facts

  • Gerling, Katja
  • Schmidt, Klaus-Dieter
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    Economic re-integration after a long period of separation among countries with different levels of development is expected to start in border regions. Enterprises along the borderline can gain a rent due to low transport and transaction costs. They benefit from the fortunate opportunity of tapping the international division of labour on the shortest distance. Therefore, border regions should be predestined to become an economic powerhouse. Despite their great potential, border regions in Central Eastern Europe are far from being an economic entity. The enormous development differences are obviously a source of constraint rather than an impetus to integration. This paper examines the potential for cross-border activities on the German- Polish border. It - first, sketches the theoretical background, - second, presents some facts and figures, and - third, discusses the key policy question of how to overcome the obstacles to closer co-operation. The paper comes to the conclusion that close cross-border co-operation, which can be labelled as a network, is still the exception rather than the rule in the region under consideration. Most of the activities can be ranged in the category of simple subcontracting arrangements in which the German partners exploit the low wage, energy and pollution control costs beyond the border.

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    Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 852.

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    Date of creation: 1998
    Handle: RePEc:kie:kieliw:852
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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    3. Gerling, Katja, 1997. "East-west corporate networking: A theoretical approach," Kiel Working Papers 805, Kiel Institute for the World Economy (IfW).
    4. Leonard Cheng, 1984. "International trade and technology: A brief survey of the recent literature," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 120(1), pages 165-189, March.
    5. Schmidt, Klaus-Dieter, 1997. "Small- and medium-sized enterprises in cross-border networks: Empirical evidence from the Pearl River Delta," Kiel Working Papers 808, Kiel Institute for the World Economy (IfW).
    6. Sander, Birgit, 1997. "Do border economies generate comparative advantages for small- and medium-sized enterprises? Evidence from the Maquiladora industry," Kiel Working Papers 806, Kiel Institute for the World Economy (IfW).
    7. Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-1219, December.
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