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The Role of the Human Capital and Managerial Skills in Explaining the Productivity Gaps between East and West

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  • Steffen, Wolfgang
  • Stephan, Johannes

Abstract

This paper assess determinants of productivity gaps between firms in the European transition countries and regions and firms in West Germany. The analysis is conducted at the firm level by use of a unique database constructed by field work. The determinants tested in a simple econometric regression model are focussed upon the issue of human capital and modern market-oriented management. The results are novel in as much as a solution was established for the puzzling results in related research with respect to a comparison of formal qualification between East and West. Furthermore, the analysis was able to establish that the kind of human capital and expertise mostly needed in the post-socialist firms are related to the particular requirements of a competitive marketbased economic environment. Finally, the analysis also finds empirical support for the role of capital deepening in productivity catch-up, as well as the case that the gaps in labour productivity are most importantly rooted in a more labour-intense production, which does not give rise to a competitive disadvantage.

Suggested Citation

  • Steffen, Wolfgang & Stephan, Johannes, 2007. "The Role of the Human Capital and Managerial Skills in Explaining the Productivity Gaps between East and West," IWH Discussion Papers 11/2007, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:iwh-11-07
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    References listed on IDEAS

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    1. Lay, Gunter, 1996. "Sachsens Investitionsgüterindustrie im Regionalvergleich: trotz Modernisierungsschub unterdurchschnittliche Produktivität," Bulletins "German Manufacturing Survey" 3, Fraunhofer Institute for Systems and Innovation Research (ISI).
    2. A. Daly & D.M.W.N. Hitchens & K. Wagner, 1985. "Productivity, Machinery and Skills in a Sample of British and German Manufacturing Plants," National Institute Economic Review, National Institute of Economic and Social Research, vol. 111(1), pages 48-61, February.
    3. Dirk Czarnitzki, 2005. "The Extent and Evolution of Productivity Deficiency in Eastern Germany," Journal of Productivity Analysis, Springer, vol. 24(2), pages 211-231, October.
    4. repec:sae:niesru:v:111:y::i:1:p:48-61 is not listed on IDEAS
    5. Lee, Kevin & Pesaran, M Hashem & Smith, Ron, 1997. "Growth and Convergence in Multi-country Empirical Stochastic Solow Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(4), pages 357-392, July-Aug..
    6. Canning, David, 1996. "Specialization, scale economies and economic development," Economics Letters, Elsevier, vol. 52(1), pages 95-100, July.
    7. Dr Johannes Stephan, 2004. "Evolving Structural Patterns in the Enlarging European Division of Labour: Sectoral and Branch Specialisation and the Potentials for Closing the Productivity Gap," Development and Comp Systems 0403003, University Library of Munich, Germany.
    8. Stephan, Johannes & Szalai, Karin, 2003. "Firm-Specific Determinants of Productivity Gaps between East and West German Industrial Branches," IWH Discussion Papers 183/2003, Halle Institute for Economic Research (IWH).
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    2. Van Reenen, John & Bloom, Nicholas & Schweiger, Helena, 2011. "The land that Lean manufacturing forgot? Management practices in transition countries," CEPR Discussion Papers 8493, C.E.P.R. Discussion Papers.
    3. Jozsef TOTH & Imre FERTO, 2017. "Innovation in the Hungarian food economy," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(1), pages 43-51.
    4. Bartz, Wiebke & Mohnen, Pierre & Schweiger, Helena, 2016. "The role of innovation and management practices in determining firm productivity in developing economies," MERIT Working Papers 2016-034, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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