The Synchronization of Wage Dynamics across EMU Members: A Test of the Endogeneity Hypothesis
Herbert S. Buscher, Hubert Gabrisch
Empirica,
No. 3,
2012
Abstract
We test the hypothesis of an endogenous currency area for the labor market of the Euro area: has the introduction of a common currency caused wage dynamics to become more synchronized and to be able to cushion for asymmetric shocks? Trade intensity, sector specialization and financial integration are tested for being the driving forces for the endogenous synchronization of wage dynamics. We use regression techniques with instrument variables, and find evidence of persistent asymmetries in nominal wage formation, despite a single currency and monetary policy. We explain the result with more specialization following financial integration, and with still existing differences in wage formation and labor market institutions. We conclude that the euro zone is not endogenous with respect to wage formation. Rather, there are incentives for beggar-thy-neighbor policies in the Euro area.
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Internationalisation Theory and Technological Accumulation - An Investigation of Multinational Affiliates in East Germany
Björn Jindra
Studies in Economic Transition,
2012
Abstract
The integration of post-communist countries into the European and global economy after 1990 has led to a renewed interest in the role of multinational enterprises (MNEs) in economic restructuring and technological development. This book explains the expansion of MNEs into a transition economy from the technology accumulation perspective. Key assumptions of the technological accumulation approach towards firms' internationalisation are tested, using the examples of foreign and West German MNEs in East Germany. The effects of technological externalities on MNE location choice are analysed, in addition to an exploration of the factors driving the location of foreign affiliates' research and development (R&D) and innovation activities. The book provides a novel and comprehensive empirical approach to assess the developmental role of MNEs, deriving significant economic policy implications for transition and emerging economies.
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Current Account Problems in the EMU – is there a Need to Adapt Fiscal Policy?
Toralf Pusch, Marina Grusevaja
Wirtschaftsdienst,
2011
Abstract
Large swings of current accounts have been a side-effect of economic integration in the European Monetary Union. Moreover, there seems to be a correlation between current accounts and the budget balance. This contribution is an inquiry into possible ways of equilibration of these balances. The focus is on fiscal policy advancements in EMU.
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Can Korea Learn from German Unification?
Ulrich Blum
IWH Discussion Papers,
No. 3,
2011
Abstract
We first analyze pre-unification similarities and differences between the two Germanys and the two Koreas in terms of demographic, social, political and economic status. An important issue is the degree of international openness. “Stone-age” type communism of North Korea and the seclusion of the population prevented inner-Korean contacts and contacts with rest of the world. This may create enormous adjustment costs if institutions, especially informal institutions, change. We go on by showing how transition and integration interact in a potential unification process based on the World Bank Revised Minimum Standard Model (RMSM) and on the Salter-Swan-Meade model. In doing so, we relate the macro and external impacts on an open economy to its macro-sectoral structural dynamics. The findings suggest that it is of utmost importance to relate microeconomic policies to the macroeconomic ties and side conditions for both parts of the country. Evidence from Germany suggests that the biggest general error in unification was neglecting these limits, especially limitations to policy instruments. Econometric analysis supports these findings. In the empirical part, we consider unification as an “investment” and track down the (by-and-large immediate to medium-term) costs and the (by-and-large long-term) benefits of retooling a retarded communist economy. We conclude that, from a South-Korean
perspective, the Korean unification will become relatively much more expensive than the German unification and, thus, not only economic, but to a much larger degree political considerations must include the tying of neighboring countries into the convergence process. We finally provide, 62 years after Germany’s division and 20 years after unification, an outlook on the strength of economic inertia in order to show that it may take much more than a generation to compensate the damage inflicted by the communist system.
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Identifying Industrial Clusters from a Multidimensional Perspective: Methodical Aspects with an Application to Germany
Matthias Brachert, Mirko Titze, Alexander Kubis
Papers in Regional Science,
No. 2,
2011
Abstract
If regional development agencies assume the cluster concept to be an adequate framework to promote regional growth and
competitiveness, it is necessary to identify industrial clusters in a comprehensive manner. Previous studies used a diversity of methods to identify the predominant concentrations of economic activity in one industrial sector in a region. This paper is based on a multidimensional approach developed by Titze et al. With the help of the combination of concentration measures and input–output methods they were able to identify horizontal and vertical dimensions of industrial clusters. This paper aims to refine this approach by using a superior measure of spatial concentration and by integrating information about spatial interdependence of industrial cluster structures to contribute to a more adequate framework for industrial cluster identification.
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Investment Grants: Which Requirements Should be Fulfilled?
Mirko Titze, Lutz Schneider
Wirtschaft im Wandel,
No. 11,
2010
Abstract
Since the year 1969 the German government has applied investment grants to improve regional economic development of disadvantaged regions. The support of eligible firms shall enhance its investment activities. Such activities may force a sustainable development of the respective region. One requirement – amongst others – for the grant of this investment support scheme is the firm’s verification of supra-regional sales. The gains resulting from the firms’ export activities lead to additional income for that region, and this stimulates multiplicative (reinforcing) regional income processes. Since the German reunification this instrument has been applied in the new federal states, too. Due to the fact that structural deficits still exist in East Germany investment grants are adopted primarily in the new federal states. Today, some policy decision makers think that the catching-up process of disadvantaged regions is not fast enough. Against this background, the further application of investment grants is discussed controversially. Some criticism tends to the criterion of supra-regional sales. It has been argued that particularly small firms are excluded from this support scheme. However, small firms are considered as key players for regional economic activities. Moreover, firms which are highly integrated in international markets depend on world trade cycles and that might be risky for the respective region. Finally, critics believe that regional actors should be boosted in order to strengthen regional identities in terms of regional buyer-supplier-networks. This article shows that policy decision makers should maintain the criterion of supra-regional sales. Particularly, regions with a loss of inhabitants need gains from supra-regional sales to stabilise their local purchasing power. Otherwise, these regions are strongly dependent on transfer flows stemming from other regions. Beyond that, supra-regional sales indicate the firm’s international competitiveness. Finally, the most important argument for supra-regional sale might be linkages to supra-regional knowledge flows which strongly affect the region’s innovative capabilities.
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State Aid in the Enlarged European Union. An Overview
Jens Hölscher, Nicole Nulsch, Johannes Stephan
Abstract
In the early phase of transition that started with the 1990s, Central and Eastern European Countries pursued economic restructuring of the enterprise sector that involved massive injections of state support. Also foreign investment from the West and facilitation of the development of a market economy involved massive injections of state support. With their accession to the European Union (EU), levels and forms of state aid came under critical review by the European Commission. This inquiry investigates whether the integration of the new member states operates on a level playing field with respect to state aid. Quantitative and qualitative analysis is relied upon to answer this key, as well as other, related questions. Findings suggest that in recent years a level playing field across the EU has indeed emerged. State aid in the new EU member countries is rather handled more strictly than laxer compared to the ‘old’ EU countries.
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20 Jahre Deutsche Einheit: Von der Transformation zur europäischen Integration - Tagungsband
IWH-Sonderhefte,
No. 3,
2010
Abstract
Der Band dokumentiert die zweitägige internationale Konferenz des IWH zum zwanzigsten Jahr der Deutschen Einheit, die am 11. und 12. März 2010 unter Mitwirkung namhafter Vertreter aus Wissenschaft und Politik mit rund 250 Teilnehmern in Halle stattfand.
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Corporate Governance in the Multinational Enterprise: A Financial Contracting Perspective
Diemo Dietrich, Björn Jindra
International Business Review,
2010
Abstract
The aim of this paper is to bring economics-based finance research more into the focus of international business theory. On the basis of an analytical model that introduces financial constraints into incomplete contracting in an international vertical trade relationship, we propose an integrated framework that facilitates the study of the interdependencies between internalisation decisions, firm-internal allocations of control rights, and the debt capacity of firms. We argue that the financial constraint of an MNE and/or its supplier should be considered as an important determinant of internal governance structures, complementary to, and interacting with, institutional factors and proprietary knowledge.
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Liberalization and Rules on Regulation in the Field of Financial Services in Bilateral Trade and Regional Integration Agreements
Diemo Dietrich, J. Finke, C. Tietje
Beiträge zum Transnationalen Wirtschaftsrecht Nr. 97,
2010
Abstract
The recent international financial crisis has sparked a fierce debate about its causes and about how to prevent a recurrence. As liberalization and deregulation were widely considered being among the major culprits, de-liberalization and re-regulation seemed a natural response. However, an economic approach to this issue does not support such black-and-white solutions. Although liberalizing financial services sectors may threaten a developing country's financial stability in the short run, it also fosters long-run economic growth if sound legal and economic institutions are in place that can mitigate the adverse side-effects of liberalization. For achieving this objective, states need the policy space to implement such regulatory measures. Contrary to a wide-spread belief, states are not unduly hampered by bilateral or multilateral agreements. Instead, by providing a far-reaching exception concerning prudential regulation states can define their own regulatory approach. The challange for developing countries thus is to install regulatory capacities.
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