Shadow Budgets, Fiscal Illusion and Municipal Spending: The Case of Germany
Peter Haug
IWH Discussion Papers,
No. 9,
2009
Abstract
The paper investigates the existence of fiscal illusion in German municipalities with special focus on the revenues from local public enterprises. These shadow budgets tend to increase the misperception of municipal tax prices and seem to have been neglected in the literature. Therefore, an aggregated expenditure function has been estimated for all German independent cities applying an “integrated budget” approach, which means
that revenues and expenditures of the core budget and the local public enterprises are combined to one single municipal budget. The estimation results suggest that a higher relative share of local public enterprise revenues might increase total per capita spending as well as spending for non-obligatory municipal goods and services. Empirical evidence for other sources of fiscal illusion is mixed but some indications for debt illusion, renter illusion or the flypaper effect could be found.
Read article
Potentials of Innovation in Eastern Germany: High Levels in Urban Centres and Dynamics in Rural Regions
Jutta Günther, Claus Michelsen, Mirko Titze
Wirtschaft im Wandel,
No. 4,
2009
Abstract
Processes of innovation are usually complex, risky, and require a number of inputs, typically research and development (R&D) and a highly qualified workforce. The resulting inventions are the basis for patents that can be further developed into marketable products and real innovations. For example the spending for R&D, the number of highly skilled employees, and the number of patent applications can be seen as relevant indicators for the innovation power of firms. The sum of these measures can identify the innovation potential of whole regions. Because of the interdependence of these variables for the process of innovation, it is self-evident to summarize the measures in one index, which is presented in this article.
There are substantial differences between East German regions in terms of the identified innovation index for the period 2002 to 2006. The overall index indicates a north-south gap of the innovation potential. Bigger cities, such as Jena and Dresden, show up on top places. The view on the dynamics of the regional innovation potential (sub-index dynamics) reveals, however, that some more rural areas are very well off, for example Bernburg, Stollberg, Hoyerswerda, Dahme-Spreewald, Wernigerode and Bad Doberan. This is mainly caused by the innovative sphere of regional centres, but also due to the low base level of some regions.
Read article
Is There a Way for Old Industrial Districts to Become Attractive for Cultural Industry? The Case of Media Businesses in Halle (Saale), Germany
Martin T. W. Rosenfeld, Christoph Hornych
IWH Discussion Papers,
No. 15,
2008
Abstract
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.
Read article
Muster der Einwohnerschrumpfung in bundesdeutschen Städten zu Beginn des 21. Jahrhunderts
Peter Franz
Schrumpfende Städte. Ein Phänomen zwischen Antike und Moderne (Institut für vergleichende Städtegeschichte, Reihe Städteforschung, Bd. 76),
2008
Abstract
The article analyzes the trends of shrinking and growing population in the German cities since 1990. After presenting diverse data on the level of the cities and the city regions, the small scale population change within cities is exemplified by the case of the city of Halle in Saxony-Anhalt. Several models and theories are checked if they can explain the phenomenon of shrinking cities. The article closes with a preliminary resume.
Read article
Long-term Effects of Business Incubators: What Happens to Incubated Firms after they Have Graduated from the BIs?
Michael Schwartz
Wirtschaft im Wandel,
No. 8,
2008
Abstract
Many cities and municipalities devote considerable public resources to the establishment and operation of business incubators (BIs) to promote the survivability and the positive development of newly founded firms. In the context of incubator evaluations, survival is one of the most important performance indicators, and survival rates of incubated firms are frequently communicated to the public by local authorities to demonstrate the success of those policy initiatives. However, in most cases, these data refers to the initial incubation period. Little is known about survival or exit dynamics of incubated firms after they have graduated from the BIs. On the basis of a comprehensive research project concerned with the development of graduate firms from incubators in Dresden, Halle (Saale), Jena, Neubrandenburg and Rostock, this article not only investigates how many firms survive after leaving the incubator facilities, but also investigates if graduation causes an immediate negative effect on subsequent survivability. The results show that about one third of all graduate firms fail after leaving the incubator. Furthermore, it can be found that graduate firms from the BIs in Halle (Saale) and Neubrandenburg face a relatively high risk of business closure especially in the first years after the completion of the incubation period.
Read article
Wie effektiv sind Technologie- und Gründerzentren in den Neuen Bundesländern?
Michael Schwartz
List Forum für Wirtschafts- und Finanzpolitik,
2008
Abstract
In Eastern Germany, since the beginning of the 1990s technology centers and business incubators are established by cities and municipalities to provide a favorable business environment for young and newly founded innovative firms. Right from the beginning, the effectiveness of these support facilities has been the subject of intense academic and policy discussions, but empirical evidence on the actual effectiveness of these centers is limited so far. Taking into account that the choice of the appropriate criteria for evaluations of the effectiveness of technology centers and business incubators is far from clear cut, this article focuses on three core indicators that are generally accepted as measures for effectiveness (incubation time, share of newly founded firms in the tenant portfolio and technological level of the supported firms), and analyses for five business incubators in East Germany whether they can be characterized as being effective policy instruments. A positive assessment of the five incubators’ effectiveness can be made with regard to average incubation time of tenant companies, as well as insofar the share of newly founded firms on all supported companies is concerned. However, deficiencies are found regarding the technological level of the incubator firms.
Read article
Suburban Municipalities on Trial – Analysing the Sustainability of Socioeconomic Structures at the Example of the Municipality Schkopau
Sabine Döhler, Alexander Kubis
Wirtschaft im Wandel,
No. 7,
2008
Abstract
This article analyses socio-economic criteria of municipalities next to large cities. In a case study, we examine the municipality Schkopau in the south of Saxony-Anhalt. We ask if the fusion of smaller communes to this “new” municipality created in 2004 was rational in terms of sustainable socio-economic structures. Hence, we use the criteria of satellite towns developed by Boustedt.
We show that the criterion of political independence is assured by law. Meanwhile, the criteria independence of culture and urban development are not completely fulfilled. Due to the high density of industrial enterprises, the municipality has high tax revenue and therefore a strong financial basis. Also, the criterion of the minimum population figure is implemented.
Based on the specific results of the satellite town criteria, we could not find definite results for the municipality Schkopau, they are rather ambivalent. This result is partly caused by the strong interactions within the functional area of the provinces Saxony, Saxony-Anhalt and Thuringia. Due to the high dynamic of the structural change, we also point out the necessity to enhance the criteria for sustainable socio-economic structures of local and regional municipalities.
Read article
Specialization as Strategy for Business Incubators: An Assessment of the Central German Multimedia Center
Michael Schwartz, Christoph Hornych
Technovation,
No. 7,
2008
Abstract
The literature on business incubators (BIs) mainly discusses findings of incubators that do not restrict themselves to specific sectors (diversified incubators). There is a strong disregard of the possible benefits arising from the concept of a sector-specialized business incubator (SBI), although this concept has become more important in recent years. In Germany, about 19% of the incubators can be characterized as being specialized. Since 1999, nearly one-third of all new BIs in Germany opened with a sector-specific focus. This study attempts to approach this research question by examining the advantages and deficiencies of this concept and to address them with empirical observations from an SBI in the city of Halle (Germany), which has an explicit sector-focus on the media industry (MI). We identify key benefits arising from such an incubator concept: (1) high quality premises and equipment, (2) improvement of service and consultancy offerings and (3) image effects for the location. We also find deficiencies of an SBI especially regarding internal networking activities and promotion of linkages to universities. Furthermore a negative working climate impedes interaction. This study offers implications for firms, incubator managers and local policy-makers who are concerned with the instrument of an SBI.
Read article
Real Options of Private House Owners in the East German Housing Market – How Demolition Subsidies Affect Investment Prospects for Private House Owners
Dominik Weiß
Wirtschaft im Wandel,
No. 6,
2008
Abstract
The subsidies of the German urban renewal program “Stadtumbau Ost” are claimed mainly by communal and cooperative housing companies. The instruments do not fit very well for private proprietors that hold a great part of the older housing stock in central locations, for example in Wilhelminian style districts. Interim evaluation reports concerning the implementation of the “Stadtumbau” program show good results for big housing blocks, but constantly high vacancy rates in the inner city quarters. It becomes obvious that the political targets have not been achieved completely so far and that market forces limit the extensive restoration of historic buildings.
The opportunities, economic incentives and the decisions of landlords and house owners will be analyzed with a real option approach. A detailed view considers the different available forms of subsidies, examining its power to affect real estate values and to initiate politically desired urban transformations. It can be shown that the current forms of subsidies fail to promote investment of private house owners because of rising value expectations. Downgrading the building zones to lower density might reduce unrealistic expectations that were identified as a hurdle to invest. As a consequence from this consideration, municipalities should implement alternative urban development concepts and adjust the subsidy policy.
Read article
In Focus: Migration Behaviour of East Germans
Alexander Kubis, Lutz Schneider
Wirtschaft im Wandel,
No. 4,
2008
Abstract
During the transition period, East Germany faced a strong out-migration towards the western part of Germany. Between 1989 and 2006, the net loss of internal migration in East Germany accumulated to 1.7 million people. Regarding the age distribution of these internal migration flows, it is shown that the net losses are primarily – over 50% – caused by young people aged 18 to 30 years. Besides the most important trend of East-West-migration, substantial regional differences can be observed. In the 1990s, the surrounding areas of large cities in East Germany benefited from suburbanisation. Afterwards, this trend has come to an end so that agglomerations in East Germany currently experience in-migration. However, peripheral regions faced strong negative net migration rates during the entire transition period.
Read article
