Abstract

30 years after reunification the East German economy still lags behind West Germany in its economic capability. Reasons are profound structural weaknesses like a small firm size structure that is connected with a low export- and R&D-intensity. This project investigates whether these structural deficiencies can be traced back to production structures of the former GDR. One hypothesis is that the conservation of old industrial centers may have impeded the structural change towards knowledge-intensive services. With respect to labor market policy and the promotion of firms in East Germany we further ask whether there is a connection between the conservation of old industrial structures and the economic weaknesses today.