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Industrial policy and the East German productivity puzzle

Listed author(s):
  • Klodt, Henning
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    Catching-up of East German productivity to West German levels has completely faded out sinde the mid 1990s. The remaining productivity gap cannot be attributed to an inferior capital endowment. Instead, it appears to be the result of an inappropriate design of industrial policy which fostered the specialization of East German industry on capital intesive smoke-stack industries. These industries are absorbing a large share of factor inputs, whereas their contribution to aggregate output is rather limited. East Germany will have to face, therefore, another wave of painful structural adjustment when public subsidies will further be reduced.

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    File URL: https://www.econstor.eu/bitstream/10419/2305/1/302489193.pdf
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    Paper provided by Kiel Institute for the World Economy (IfW) in its series Kiel Working Papers with number 943.

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    Date of creation: 1999
    Handle: RePEc:zbw:ifwkwp:943
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    1. Huber, Bernd, 1997. "Die Effizienz von Kapitalsubventionen bei Unterbeschäftigung - eine theore­tische und finanzpolitische Analyse zur Förderpolitik in den Neuen Bundes­ländern," Munich Reprints in Economics 19406, University of Munich, Department of Economics.
    2. Sinn, Gerlinde & Sinn, Hans-Werner, 1992. "Kaltstart. Volkswirtschaftliche Aspekte der Deutschen Vereinigung," Monograph, Mohr Siebeck, Tübingen, edition 2, number urn:isbn:9783161459429.
    3. David Begg & Richard Portes, 1993. "Eastern Germany since unification: wage subsidies remain a better way," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 1(4), pages 383-400, December.
    4. Klodt, Henning, 1996. "West-Ost-Transfers und Strukturprobleme in den neuen Ländern," Open Access Publications from Kiel Institute for the World Economy 1677, Kiel Institute for the World Economy (IfW).
    5. George A. Akerlof & Andrew K. Rose & Janet L. Yellen & Helga Hessenius, 1991. "East Germany in from the Cold: The Economic Aftermath of Currency Union," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 1-106.
    6. Sinn, Hans-Werner, 1995. "Factor Price Distortions and Public Subsidies in East Germany," CEPR Discussion Papers 1155, C.E.P.R. Discussion Papers.
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