Productivity gap of East German industry: A summarizing evaluation
Joachim Ragnitz
Wirtschaft im Wandel,
No. 7,
2001
Abstract
Ten years after German unification labor productivity in the New Laender reaches only 70 per cent of West German levels. Further, in the second half of the 1990ies, convergence did not continue. Because productivity can be regarded as a key for wages, for competitiveness of firms and for future transfer payments, the reasons for low productivity in East Germany are of major importance. In this article, it is argued that the existing productivity gap reflects mainly structural differences between East and West Germany, that is the high share of small firms and the predominance of sectors with low value added per worker. Additionally, difficulties on product markets leading to insufficient selling prices are responsible for the comparative low productivity of East German firms. Differences in capital intensity or in human capital, however, do explain only a small part of the productivity gap.
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East German Manufacturing: Strongly differentiated if branches and firms are distinguished
Joachim Ragnitz
Wirtschaft im Wandel,
No. 2,
2001
Abstract
The East German manufacturing sector is characterized by a strong differentiation that cannot be seen in aggregate figures. On the basis of highly disaggregated figures that distinguishes by branches and firms as well it is shown that neither in decreasing industries (like the clothing industry) all firms are faced with a decline in production nor in growing industries (like fine mechanics) all establishments can really participate in growth. It is argued that there is still an intensive selection process in the East German economy that will help to reach a higher level of competitiveness.
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Methodical limits of calculating productivity in the new Länder
Gerald Müller
IWH Discussion Papers,
No. 129,
2000
Abstract
The „Arbeitskreis Volkswirtschaftliche Gesamtrechnung der Länder“ now publishes figures concerning the value added in Germany. Formerly the Statistische Bundesamt had this assignment. Some corporations have plant locations in the new Länder as well as in the old Länder. The employed method for splitting-up the value added produce by these corporations might lead to an underestimation of the overall value added produced in the new Länder. However, an estimation using the firm panel of the IAB shows that the East German productivity gap for manufacturing is overestimated by maximally two percentage points. Still in sectors that are dominated by multi plant corporations this effect is stronger. All in all the East German productivity gab is overestimated by maximally three percentage points.
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Environmental policy under product differentiation and asymmetric costs - Does leapfrogging occur and is it worth it?
Jacqueline Rothfels
IWH Discussion Papers,
No. 124,
2000
Abstract
This paper studies the influence of environmental policies on environmental quality, domestic firms, and welfare. Point of departure is Porter’s hypothesis that unilateral environmental regulation may enhance the competitiveness of domestic firms. This hypothesis has recently received considerable support in theoretical analyses, especially if imperfectly competitive markets with strategic behavior on behalf of the agents are taken into account. Our work contributes to this literature by explicitely investigating the implications of asymmetric cost structures between a domestic and a foreign firm sector. We use a partial-equilibrium model of vertical product differentiation, where the consumption of a product causes environmental harm. Allowing for differentiated products, the domestic industry can either assume the market leader position or lag behind in terms of the environmental quality of the produced product. Assuming as a benchmark case that the domestic industry lags behind, we investigate the possibility of the government to induce leapfrogging of the domestic firm, i.e. a higher quality produced by the domestic firm after regulation than that of the competitor prior to regulation. It is shown that in the case of a cost advantage for the domestic firm in the production process the imposition of a binding minimum quality standard can serve as a tool to induce leapfrogging. In case of a cost disadvantage the same result can be achieved through an adequate subsidization of quality dependend production costs. Thus, careful regulation enables the domestic firm in both scenarios to better its competitive position against foreign competitors and to earn larger profits. Additionally, environmental quality and welfare can be enhanced.
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Capital equipment of East German work stations: Do not overstate gaps
Joachim Ragnitz
Wirtschaft im Wandel,
No. 9,
2000
Abstract
New jobs depend heavily on productive investment. As nearly 800 bio DM were invested in the East German enterprise sector since 1990, most existing jobs can be regarded potentially competitive now. However, capital intensity is still much lower than in West Germany and reaches a level of only 75 per cent. In manufacturing, however, capital intensity is only slightly lower than in the old Laender.
There are mainly two reasons for the low capital intensity in the aggregate: The dominance of small firms producing regularly with a small capital stock per employee, and lower wages in East Germany compared with West Germany: Although capital prices are distorted by high subsidies, factor price relations favour labor to capital. This leads to the conclusion that low capital intensity reflects an optimum; convergence is therefore not necessarily to occur.
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Relationship Lending within a Bank-Based System: Evidence from European Small Business Data
Hans Degryse, Patrick Van Cayseele
Journal of Financial Intermediation,
No. 1,
2000
Abstract
We investigate relationship lending using detailed contract information from nearly 18,000 bank loans to small Belgian firms operating within the continental European bank-based system. Specifically, we investigate the impact of different measures of relationship strength on price and nonprice terms of the loan contract. We test for the possibility of rent shifting by banks. The evidence shows two opposing effects. On the one hand, the loan rate increases with the duration of a bank–firm relationship. On the other hand, the scope of a relationship, defined as the purchase of other information-sensitive products from a bank, decreases the loan's interest rate substantially. Relationship duration and scope thus have opposite effects on loan rates, with the latter being more important. We also find that the collateral requirement is decreasing in the duration of the relationship and increasing in its scope.
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