Leaders and Laggards – An Analysis of Regional Growth Patterns in East Germany 1996 – 2005
Alexander Kubis, Mirko Titze, Matthias Brachert
Wirtschaft im Wandel,
No. 4,
2008
Abstract
Since the half of the 1990s, a heterogeneous development of East Germany NUTS 3 regions has taken place. Some of these regions could increase their competitiveness and regional employment. Otherwise, some regions do exist with less positive economic developments.
This article tries to contribute to this discussion. With the help of productivity and employment growth rates from 1996 to 2005, we create a regional classifications scheme for East Germany. Four types can be identified: Growth Regions, Weak Growth Regions, Regions in Transition, Stagnant Regions. Further, we demonstrate that each of these regions is undergoing specific patterns of structural change. Growth Regions (above average productivity growth and employment growth) benefit from positive developments both in the manufacturing and service sector. Additional research indicates that there is a need for an industrial base which contributes to a sound service sector. Thereby, spatial proximity of these sectors seems to be elementary for the above average development of this type of regions.
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Oil Prices and International Trade: How Petrodollar Recycling Affects the Industrialised Countries
Götz Zeddies
Wirtschaft im Wandel,
No. 4,
2008
Abstract
Since 2004, prices for crude oil nearly tripled at international commodity markets. In the wake of the oil crises of the 1970s and ‘80s, numerous empirical studies analysing the macroeconomic effects of sharp increases in commodity prices were carried out pointing at the risks of oil price rises for GDP growth in oil-importing countries. However, in most of these analyses, the impact of oil price increases on international trade of oil-importing countries, which gained in importance in the course of globalisation, is considered only marginally. This is especially the case for the additional revenues of oil-exporting countries spent in large parts for imports from and investment in the industrialised economies.
The present article examines the impact of oil price increases on merchandise exports and imports of single oil-importing industrialised countries. The results show that the curbing effects on merchandise exports are lower than on imports. Whereas import demand responds disproportionally high on the decline in consumption and investment in consequence of oil price increases, the effects on merchandise exports are ambivalent. On the one hand, exports to oil-importing trading partner countries decline due to the local economic downturns, but on the other, exports to oil-exporting countries sharply increase. As a consequence, the negative impact of rising oil prices on macroeconomic activity in oil-importing countries is lowered by the external sector due to growing net exports.
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German Economic Growth in 2008: Temporary Slow Down
Wirtschaft im Wandel,
No. 4,
2008
Abstract
World economic growth has slowed in the first months of 2008. The main causes are the crisis in the US housing sector and the turmoil in the financial sector in general, the spreading expectation of a recession in the US, and sharply rising prices for energy and food. The German economy, though, is still expanding healthily, with strong investment and export activities. Private consumption, however, shrank at the end of 2007. In 2008, while favorable labor market conditions will improve job security and thus the propensity to consume, real incomes will not rise by much due to the risen inflation rate; consumption will again expand only modestly this year. A slower expansion of the world economy and the stronger euro will dampen exports and investment. All in all, growth will slow to (working-day adjusted) 1.2% in 2008. Chances are good that in the next year, after the negative shocks have faded out a bit, growth will be accelerating again. The East German Economy was on a lower growth path in 2006 and 2007 than the economy in the West, according to recently revised national accounts data. Industrial production, however, is more dynamic in the East. Unemployment rates will continue to decrease faster in the East: as in the rest of Germany, employment is growing, and, contrary to what happens in the West, the labor force is shrinking.
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Business cycle forecast 2008: German upswing takes a break
Wirtschaft im Wandel,
No. 1,
2008
Abstract
Economic growth in the industrial countries will be much more muted in 2008 than in the past year. One cause is the prolonged oil price hike during 2007. The second and more important cause is the intensification of tensions on world financial markets. Due to problems in the financial sector, credit expansion will slow next year in the euro area as well as in the US. This will dampen demand in the real economy. A significant downswing in the industrial countries, however, is not the most likely scenario: in the US, expansive economic policy and a weak dollar that gives production in the US a competitive edge will prevent the economy from sliding into recession. In the euro area, high profitability of firms and structural improvements in the working of labour markets will help the economy cope with the stronger euro and with higher costs of external financing due to the turmoil in the financial sector. In Germany, the upswing has still not reached the demand of private households. The main reason is that real wages were stagnating in 2007 and will not rise by much in 2008, since inflation has accelerated considerably at the end of last year. In addition, weaker dynamics of external demand will dampen export growth. This and the end of tax incentives for investment at the end of 2007 will dampen investment activity. All in all, the economy will slow down in the first half of 2008. However, chances are good that the upswing will only have taken a break: when the dampening external shocks have ceased, the driving powers of the upswing will prevail; dynamic employment growth is a reflection of the strong confidence of firms. A major risk for employment and for the German economy in general is, however, the possibility that the policy concerning the labour markets changes course; bad omens are the recent the introduction of minimum wages for postal services and the announced extension of unemployment benefits for persons older than 50.
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From University Town to Knowledge City: Strategies and Regulatory Hurdles in Germany
Peter Franz
Knowledge-Based Urban Development: Planning and Applications in the Information Era,
2008
Abstract
The trend of cities, serving as a location for universities and research institutes, to take into consideration new strategies utilizing this location factor for growth-oriented urban development can also be observed in Germany. An overview of the quantitative preconditions shows that many German cities dispose of favorite preconditions for such a knowledge city strategy. An analysis of the policy arena comes to the result that the political actors are confronted with the task of a complex multi-level-policy where networking skills become essential. A comparison with the policy conditions in the U.S. makes it quite clear that especially the German universities have the status of semi-autonomous actors complicating negotiating and coordinating activities between city and science representatives. First examples of deregulation show that these hurdles can be overcome in the future.
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Growth versus Equalisation? An Examination of Strategies for Regional Policy in the Czech Republic, Hungary and Poland after EU Accession
Gerhard Heimpold
Jahrbuch für Regionalwissenschaft,
No. 1,
2008
Abstract
Im Beitrag wird am Beispiel der drei neuen Mitgliedsländer der Europäischen Union (EU) - Tschechische Republik, Ungarn und Polen - untersucht, wie dort in der Phase nach dem EU-Beitritt im Rahmen der verfolgten regionalpolitischen Strategien das Verhältnis zwischen Wachstums- und Ausgleichsziel ausgestaltet wurde. Die Untersuchung betrifft den Einsatz der EU-Strukturfonds-Mittel für regionalpolitische Zwecke im Zeitraum 2004-2006 und gibt einen Ausblick auf die Förderperiode 2007 bis 2013. Trotz gewisser im Detail sichtbarer Unterschiede bei der Gewichtung zwischen Wachstums- und Ausgleichziel verfolgen alle drei untersuchten Länder eine Doppelstrategie, die sowohl auf die Stärkung vorhandener Entwicklungspole als auch auf die Unterstützung der schwächsten Regionen ausgerichtet ist. In der begonnenen Förderperiode 2007-2013 könnte sich im Zusammenhang mit der Absicht, die EU-Strukturpolitik stärker in Einklang mit der Lissabon-Agenda zu bringen, Anreize für eine
ausgeprägtere Wachstumsorientierung in der Regionalpolitik der drei Länder ergeben.
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Poland: Strong Domestic Demand Will Drive Economic Activity
Martina Kämpfe
Wirtschaft im Wandel,
No. 12,
2007
Abstract
Domestic demand was the main force behind growth in 2007. The high level of both, gross fixed investments of firms and private consumption, led to extended industrial production capacities and increased demand of imports. Extraordinarily high was the demand for the output of construction firms. Rising employment and wages and the continuing expansion of loans to the household sector supported the private consumption growth. The high levels of capacity utilization coincide with shortages of labour. First responses to this were wage hikes, which pushed the unit labour costs and led to some increase in consumer price inflation. In 2008, expansion of economic activity will continue at only some lower level, driven by investments and consumption.
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The German Upswing Takes a Break
Wirtschaft im Wandel,
2. Sonderausgabe
2007
Abstract
The world economy continues to expand healthily, but risks have increased during summer. The crisis of the housing sector in the US has deepened: A revaluation of mortgage backed assets has triggered turbulences on global financial markets. The institutes expect that financial markets will calm down during the coming months, but that the downswing in the US will slow the pace of the world economy. The economy in the euro area will, in addition, be dampened by the appreciation of the euro. The German economy is, in spite of a restrictive fiscal policy, in a robust upswing. Because wage setting and inflation continues to be moderate, there will be no need for a restrictive monetary policy. Thus the German economy will, due to slower demand from the US and higher costs of financing, lose momentum, but chances are good that the upswing will only take a break. In the coming year private consumption is expected to be the main contributor to growth, because wage incomes will expand strongly. Unemployment will continue to shrink, albeit at a smaller rate than during 2007. Fiscal policy will no longer be restrictive. Economic policy has improved the conditions for growth in Germany; there is, however, still much to do. Public finances have to be consolidated further, but at the same time, public investment has to be strengthened. This can be achieved if public consumptive expenditure growth is limited. The institutes suggest to increase public expenditure by 2% per annum over the cycle in nominal terms; this is, by less than by the trend growth rate of nominal GDP.
The institutes advise against a reversal of the recent labour market reforms. Instead, incentives for taking up jobs should be increased further.
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Structural Policy in East Germany – A Discussion about the Common Task “Improvement of Regional Economic Structure“
Mirko Titze
Wirtschaft im Wandel,
No. 10,
2007
Abstract
After the reunification – more than ten years ago – the convergence process in the eastern German regions has started. Unfortunately, the convergence process has decelerated since 1995. For this reason, economists and politicians are discussing the kind of government aid, which has been applied since the early nineties. The paper deals with the Common Task “Improvement of Regional Economic Structure“ (Gemeinschaftsaufgabe “Verbesserung der regionalen Wirtschaftsstruktur“). It is one of the most important instruments for the “Reconstruction East“. Empirical studies have shown that this instrument has led to an additional growth impulse. However, for the last ten years the budget of the Common Task has decreased. Under the restriction of scarce financial resources the governments of the federal states have to adjust their regional programmes. Economists and politicians dispute to change unselective into selective (regional and sectoral) government aid. The article shows that in particular the Federal State of Brandenburg as well as the Free State of Saxony are focusing the Common Task on specific industrial sectors and certain regions.
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Spatial Distribution of East German Innovative Competencies: Significant Increase in the Southwestern Hinterland of Berlin and in the Centres of Saxony and Thuringia
Peter Franz
Wirtschaft im Wandel,
No. 9,
2007
Abstract
Patent applications constitute an essential indicator for the extent of innovative activities in an economy or region. Due to the fact that innovative activities are in general spatially concentrated, policy makers perceive in this information starting points for a growth-oriented regional policy. Against this background, the Halle Institute for Economic Research (IWH) in 2004 had examined the spatial distribution of industries, firm networks and innovative competencies in the context of an area-wide study for East Germany. Newly available data for the patent statistics allow for an updating of these results regarding the innovative competencies for the time period from 2000 to 2005. In comparison to the time period between 1995 and 2000, an increase in innovative competencies becomes evident. This growth takes place almost exclusively in regions where innovative competencies are already domiciled. All in all, the growth dynamics of East Germany with regard to patent applications is slightly behind the West German one. The distribution of technological fields, to which the applied patents refer to, remained largely constant during the two observation periods. In the area of bio-technology, electrical engineering and of health care the standing of East Germany has further improved. With regard to political implications, the data should not be used for imposing technology specific support programs. Instead a tax relief for R&D independent of the used technologies seems to be more adequate.
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