Veblen, Myrdal, and the Convergence Hypothesis: Toward an Institutionalist Critique
John B. Hall, Udo Ludwig
Journal of Economic Issues,
2010
Abstract
An Institutionalist critique that draws from selected contributions of Veblen and Myrdal initiates a convergence debate. Challenged is a Neoclassical interpretation of economic processes expected to lead toward a catching up with respect to per capita output of Germany's poorer eastern region with the richer western region. Economic method is considered, and the Institutionalist School of Thought rooted in contributions of Veblen as well as Myrdal is touted for offering higher levels of explanatory power than the Neoclassical School. We challenge the usefulness of laws in Economic Science, and especially their applicability to the empirical economy. Instead of automatic forces driving a meliorative trend, we seek to establish that human agency and policy play determining roles in affecting economic and societal outcomes in Germany's eastern region.
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Why are East Germans not More Mobile? Analyzing the Impact of Social Ties on Regional Migration
Peter Bönisch, Lutz Schneider
Abstract
Individuals’ preferences in transition regions are still shaped by the former communist system. We test this ‘Communism legacy’ hypothesis by examining the impact of acculturation in a communist regime on social network participation and, as a consequence, on preferences for spatial mobility. We focus on the paradigmatic case of East Germany where mobility intentions seem to be substantially weaker than in the western part. Applying an IV ordered probit approach we firstly find that East German people acculturated in a Communist system are more invested in locally bounded informal social capital than West Germans. Secondly, we confirm that membership in such locally bounded social networks reduces the intention to move away. Thirdly, after controlling for the social network effect the mobility gap between East and West substantially reduces. Low spatial mobility of the eastern population, we conclude, is to an important part attributable to a social capital endowment characteristic to post-communist economies.
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FDI and the National Innovation System - Evidence from Central and Eastern Europe
Jutta Günther, Björn Jindra, Johannes Stephan
D. Dyker (ed.), Network Dynamics in Emerging Regions of Europe, Imperial College Press,
2010
Abstract
The paper investigates strategic motives, technological activities and determinants of foreign investment enterprises’ embeddedness in post-transition economies (Eastern Germany and selected Central East European countries). The empirical study makes use of the IWH FDI micro database. Results of the descriptive analysis of investment motives show that market access dominates over efficiency seeking and other motives. The majority of investors are technologically active in the region as a whole, but countries differ in terms of performance. The probit model estimations show that firm specific characteristics, among them innovativeness and autonomy from parent company, are important determinants of foreign investment enterprises’ embeddedness.
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Still Divided by Transformation? Characteristic Features of the German Innovation System and the Barriers to Extending it to East Germany
Peter Franz
D. Dyker (ed.), Network Dynamics in Emerging Regions of Europe, Imperial College Press,
2010
Abstract
This paper concentrates on various factors preventing the establishment of an efficient regional innovation system in East Germany. For this purpose in the third section the strengths and weaknesses of the all German innovation system are elaborated by means of patent statistics. The fourth section describes the evolution of the East German innovation system after 1990, lists the most important supportive political measures, and discusses several reasons for deficits in innovative performance. The fifth section concludes and presents suggestions for political intervention.
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Mutual Perception of Science and Industry in Innovation Networks – Evidence from East Germany
Jutta Günther, Cornelia Lang
D. Dyker (ed.), Network Dynamics in Emerging Regions of Europe, Imperial College Press,
2010
Abstract
The paper examines how science and industry perceive each other. Cooperation in the field of innovation and research and development has increased in recent years. But comprehensive empirical research on the mutual perception of science and industry is lacking so far. The article presents the results of explorative research based on a number of qualitative interviews with representatives from science and industry on that topic. The interviews were carried out in the Central German Region which is a centre of manufacturing industry especially of chemicals. So the two selected industries are chemical industry (high-tech based) and food processing (low-tech based). The paper provides remarks on the German innovation system. The empirical section summarizes the interview reports. We found only little evidence of conflict of interests between market-oriented industry and science organisations. Cooperation exists and works. The key issue is trust.
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Is East Germany Catching Up? A Time Series Perspective
Bernd Aumann, Rolf Scheufele
Post-Communist Economies,
2010
Abstract
This article assesses whether the economy of East Germany is catching up with the West German region in terms of welfare. While the primary measure for convergence and catching up is per capita output, we also look at other macroeconomic indicators such as unemployment rates, wage rates and production levels in the manufacturing sector. In contrast to existing studies of convergence between regions of the reunified Germany, our approach is based purely upon the time series dimension and is thus directly focused on the catching up process in East Germany as a region. Our testing set-up includes standard ADF unit root tests as well as unit root tests that endogenously allow for a break in the deterministic component of the process. We find evidence of catching up for East Germany for most of the indicators. However, the convergence speed is slow, and thus it can be expected that the catching up process will take further decades until the regional gap is closed.
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Challenges for Future Regional Policy in East Germany. Does East Germany really show Characteristics of Mezzogiorno?
Mirko Titze
A. Kuklinski; E. Malak-Petlicka; P. Zuber (eds), Souther Italy – Eastern Germany – Eastern Poland. The Triple Mezzogiorno? Ministry of Regional Development,
2010
Abstract
Despite extensive government support the gap between East and West Germany has still not been successfully closed nearly 20 years post German unification. Hence, some economists tend to compare East Germany with Mezzogiorno – underdeveloped Southern Italy. East Germany is still subject to sever structural problems in comparison to West Germany: lower per capita income, lower productivity, higher unemployment rates, fewer firm headquarters and fewer innovation activities. There are East German regions with less than desirable rates of development. Nevertheless, the new federal states have shown some evidence of a convergence process. Some regions have developed very positively – they have improved their competitiveness and employment levels. As such, the comparison of East Germany with Mezzogiorno does not seem applicable today.
According to Neoclassical Growth Theory, regional policy is targeted enhancing investment (hereafter the notion ‘investment policy’ is used). has been the most important instrument in forcing the ‘reconstruction of the East’. Overall, the investment policy is seen as having been successful. It is not, however, the only factor influencing regional development – political policy makers noted in the mid 1990s that research and development (R&D) activities and regional concentrated production networks, amongst other factors, may also play a part. The investment policy instrument has therefore been adjusted. Nevertheless, it cannot be excluded that investment policy may fail in particular cases because it contains potentially conflicting targets. A ‘better road’ for future regional policy may lie in the support of regional production and innovation networks – the so-called industrial clusters. These clusters would need to be exactingly identified however to ensure effective and efficient cluster policies.
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Interactive Dynamic Capabilities and Regenerating the East German Innovation System
N. von Tunzelmann, Jutta Günther, Katja Wilde, Björn Jindra
Contributions to Political Economy,
2010
Abstract
The paper sets out a specification of capabilities and competencies derived from Sen’s work on consumer capabilities and welfare economics. This approach is one that proves remarkably easy to generalise, first to producer and supplier capabilities, and thence to interactive and dynamic capabilities. The approach is then applied via the consequential perspectives of regional systems of innovation and network alignment to the case of the efforts to regenerate the innovation system in East Germany since reunification. It is seen that this process can be divided into three periods, of which the most recent appears to meet some of the theoretical requirements for effective interactive capabilities. It is less clear that the criteria for dynamic capabilities—which involve considerations of speed-up and flexibility, to meet the market requirements in real time—have yet been taken sufficiently seriously.
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What Happened to the East German Housing Market? A Historical Perspective on the Role of Public Funding
Claus Michelsen, Dominik Weiß
Post-Communist Economies,
2010
Abstract
The paper analyses the development of the East German housing market after the reunification of the former German Democratic Republic and the Federal Republic of Germany in 1990. We analyse the dynamics of the East German housing market within the framework of the well-known stock-flow model, proposed by DiPasquale and Wheaton. We show that the today observable disequilibrium to a large extend is caused by post-unification housing policy and its strong fiscal incentives to invest into the housing stock. Moreover, in line with the stylized empirical facts, we show that ‘hidden reserves’ of the housing market were reactivated since the economy of East Germany became market organized. Since initial undersupply was overcome faster than politicians expected, the implemented fiscal stimuli were too strong. In contrast to the widespread opinion that outward migration caused the observable vacancies, this paper shows that not weakness of demand but supply side policies caused the observable disequilibrium.
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May Cities in De-Industrialized Regions Become Hot Spots for Attracting Cultural Businesses? The Case of Media Industry in Halle an der Saale (Germany)
Christoph Hornych, Martin T. W. Rosenfeld
European Planning Studies,
2010
Abstract
Policy-makers from many regions where old industrial structures in the field of manufacturing have collapsed are trying to stimulate entrepreneurial activities of businesses in the cultural industry. The question is whether this strategy could be successful. This article examines the strategy of supporting the sector of media industry (“MI”) by policy-makers in the region of Halle in East Germany, where a strong de-industrialization has taken place after the German reunification. Stimulated by the policy-makers' support measures, there actually was a remarkable development of MI. However, the number of MI firms and their employees did not further increase in recent years, after having reached a certain level. This illustrates the limits of political measures for turning a city's path of industrial development voluntarily.
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