Can Eastern Germany catch-up?

Abstract

"In this paper it is argued that modern trade and growth theory are better suited to analyze the problem of the catching-up of eastern Germany than the neo-classical theories. These modern theories are less optimistic about fast convergence between the two Germanies than neo-classical theories. However, modern trade theory leads to a to pessimistic conclusion with respect to the possibility of convergence between the two Germanies, because it focuses exclusively on static locational questions and abstract from growth aspects. Modern growth theory allows for a more optimistic view an the possibility of convergence between the two Germanies. However, the difficulties in quantifying the relevant variables and the fact that the German unification presents a unique event of a transition of a plan- to a market economy makes predictions on how long it takes for a complete catch-up extremely uncertain." (Author's abstract, IAB-Doku) ((en))

Cite article

Brakman, S. & Garretsen, H. (1994): Can Eastern Germany catch-up? A brief look at neo-classical and modern growth and trade theories. In: U. Blien, H. Herrmann & M. Koller (Hrsg.) (1994): Regionalentwicklung und regionale Arbeitsmarktpolitik. Konzepte zur Lösung regionaler Arbeitsmarktprobleme? (Beiträge zur Arbeitsmarkt- und Berufsforschung, 184), p. 64-73.