Finance and Growth in a Bank-Based Economy: Is It Quantity or Quality that Matters?
Michael Koetter, Michael Wedow
Journal of International Money and Finance,
No. 8,
2010
Abstract
Most finance–growth studies approximate the size of financial systems rather than the quality of intermediation to explain economic growth differentials. Furthermore, the neglect of systematic differences in cross-country studies could drive the result that finance matters. We suggest a measure of bank’s intermediation quality using bank-specific efficiency estimates and focus on the regions of one economy only: Germany. This quality measure has a significantly positive effect on growth. This result is robust to the exclusion of banks operating in multiple regions, controlling for the proximity of financial markets, when distinguishing different banking sectors active in Germany, and when excluding the structurally weaker East from the sample.
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de-industrialisation and re-industrialisation. Is the East German industry a stability factor of regional economic development?
Gerhard Heimpold
Bundesinstitut für Bau-, Stadt- und Raumforschung im Bundesamt für Bauwesen und Raumordnung (Hrsg.), 20 Jahre deutsche Einheit – Zwei Dekaden im Rückblick. Informationen zur Raumentwicklung, Heft 10/11,
2010
Abstract
The contribution analyses the development of the manufacturing sector in East German regions after 1990. The focal question is whether the manufacturing sector has evolved as a factor which contributes to stabilization of regional economic development. Though until 2008 – when the economic recession began – the manufacturing sector evolved as an engine of growth , the intra-industry structure of the manufacturing sector reveals a number of shortcomings, especially below average proportions of technology-driven industries and high-grade service activities. Further structural change will be needed.
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Economic Effects of Investment Grants for Water and Sewerage Infrastructure – The Case of Saxony
Peter Haug
Wirtschaft im Wandel,
No. 11,
2010
Abstract
The article deals with the regional economic growth effects of the German “Joint Scheme” for the improvement of regional economic structures (“GA-Infra”). It focuses on water and sewerage projects located in the federal state of Saxony (Germany) during the funding period 2000-2007. Evaluating these projects is important for scientific as well as for economic policy reasons.
First of all, according to general economic theory, the potential direct and indirect supply-side effects of the water and sewerage infrastructure as well as the price effects caused by this infrastructure are relevant for location decisions only to certain branches of the manufacturing industry.
Subsidies for the development of the sewerage infrastructure have been granted mostly according to the growth target of regional policy, i.e. primarily to municipalities with above-average volumes of industry sewage. This finding could not be confirmed for water provision.
A regression analysis (estimating the labour demand of the local manufacturing industry) showed no empirical evidence for any relationship between the changes in labour demand and the amount of GA-Infra funded water and sewerage infrastructure investments. This might be a consequence of the already satisfactory development condition of the infrastructure in question at the beginning of the funding period (“ubiquitous infrastructure”).
According to a survey of local governments conducted by the IWH, these results might be explained by the fact that business customers did not benefit from price reductions despite the GA-Infra funding granted to their local water and sewage disposal providers. Even though there might be some intuitively plausible reasons (decreasing population, no connection fees) for these findings, no effect on firm location decisions can be expected under these circumstances.
All in all, we do not consider the further extension of these funding priorities to be necessary. Especially, the GA-Infra water/sewerage grants should neither be used to mitigate the cost effects of demographic changes or regulation nor to compensate for losses caused by the buyer power of large firms.
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Governmental Learning as a Determinant of Economic Growth
Marina Grusevaja
IWH Discussion Papers,
No. 23,
2010
Abstract
Systemic economic transition is a process of determined radical institutional change, a process of building new institutions required by a market economy. Nowadays, the experience of transition countries with the implementation of new institutions could be reviewed as a method of economic development that despite similar singular steps has different effects on the domestic economic performance. The process of institutional change towards a market economy is determined by political will, thus the government plays an important role in carrying out the economic reforms. Among the variety of outcomes and effects the attention is drawn especially to economic growth that diverges significantly in different post-transition countries. The paper attempts to shed light upon the problem on the basis of institutional economics, of economics of innovation and partially of political economy of growth using an evolutionary, process-oriented perspective. In this context the issue central to the promotion of economic growth is the successful implementation of new institutions through governmental activities. The paper shows that under the conditions of bounded rationality and radical uncertainty economic growth is determined, inter alia, by the capacity for governmental learning.
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Political Institutionalisation and Economic Specialisation in Polycentric Metropolitan Regions – The Case of the East German ‚Saxony Triangle‘
Peter Franz, Christoph Hornych
Urban Studies,
2010
Abstract
The rising focus of politicians as well as scientists in the EU on the large urban agglomerations as centres of economic growth is accompanied by political efforts to identify and to demarcate such agglomerations under the label ‘metropolitan regions’. This study develops a theoretical framework broaching the issue of cooperation between municipalities from the perspective of regional economics as well as political science. The framework is applied to the empirical case of the polycentric metropolitan region of the ‘Saxony triangle’ in east Germany. The results show that various intervening factors prevent intense co-operation between the actors in the region. Policy implications and conclusions for future research are discussed.
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The Russian System of Cities from the Perspective of New Economic Geography
Albrecht Kauffmann
Potsdamer Schriften zur Raumwirtschaft, Bd. 2,
2010
Abstract
The rise in energy prices may result in long-lasting rise in costs of freight transports. Which effects do rising freight transport costs have for the development of urban systems? Such rise of transport costs in real terms has happened in Russia after price liberalisation in 1992. At the same time, the Russian official demographic statistics provides data that can be used to test hypotheses concerning the development of urban systems affected by rising transport costs. In the present study, these data are comprehensively evaluated. The theoretical background is provided by modelling of a linear shaped urban system in the framework of New Economic Geography. By means of this tool, analysis can be applied to spacious urban systems with large transport distances. For the first time, the underlying theoretical approach is explained in detail. The empirical results provide evidence for the outcomes of the theoretical model: In spacious countries or regions, respectively, whose urban systems are drawn-out on long lines, rising costs of freight transport are conducive to tendencies of concentration of population in large cities in the centre of the system, while peripheral regions are increasingly disconnected.
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Human Capital in a regional Comparison of East and West Germany: Catching up of the New Laender
Maike Irrek
Wirtschaft im Wandel,
No. 7,
2010
Abstract
The endowment with human capital is not only a factor that strongly influences the region’s current economical potential, but also has a considerable effect on its future economical potential, i.o.w. economic growth. Human capital describes the employable peoples’ skills and their personal knowledge, which can be used in the production of goods and services as well as in the further development of them.
The public debate about East Germany’s economic development is referring to this crucial relation when exposing the problems of the medium-term development of the supply of professionals or the firm’s research- and development intensity. For a better assessment of the situation on the aggregation level of the New Laender this article attempts to estimate the human capital endowment and its evolution over time in comparison to West Germany.
The average human capital of the employed persons and the labour force potential is estimated by means of the earned income for East and West Germany separately. As a result the average human capital of the employed persons can be shown to have risen slightly from 1995 to 2004 in East Germany while there is nearly no increase in West Germany. This may be considered as a catching-up process, without already having led to equalization.
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