East German construction firms on the average with small profits
Brigitte Loose, Udo Ludwig
Wirtschaft im Wandel,
No. 14,
2004
Abstract
The article is concerned with the cost and revenue situation in East and West German construction firms from the early 90´s onwards. As a result of the construction boom the East German firms could reduce the unit labour costs in the middle of the nineties under the corresponding western level. However, in the second half of the nineties they lost their advantage due to extremely decreasing productivity and rising unit labour costs. Nonetheless, on the average they earned profits, but in the observed last two years 2001 and 2002 the rate of return in the East remains smaller than in the West.
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Business services in East Germany - an update
Siegfried Beer
Wirtschaft im Wandel,
No. 8,
2004
Abstract
The article presents the results of the German service sector statistic 2001 for company oriented services in the New Länder (without Berlin), which have been derived from data of the regional statistical offices. The article can be regarded as an update of an earlier version (see “Wirtschaft im Wandel”, 12/2003, p.342-349). Fundamental results are: 1. Compared to 2000, the New Länder’s proportion of Germany’s total revenue and employment in company oriented services has, compared to 2000, slightly increased, but remains rather small. 2. The profitability of East German companies has deteriorated, measured by total expenses per sales unit. Partially this might be due to the increased number of businesses. 3. Last evaluation’s assumption, that East German company’s labor productivity (gross value added per employees) is half of the West German’s, has been proofed in this actual evaluation. An illustration of reasons is not being provided since it has been discussed extensively in the first evaluation.
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Profitability of chemical industry varies across East Germany
Hans-Ulrich Brautzsch, Udo Ludwig
Wirtschaft im Wandel,
No. 5,
2004
Abstract
The Article is concerned with the cost and revenue situation in the East German chemical industry since the early 90s. In 2001 the industry managed to undercut the unit labour costs faced by their West German counterparts. Nonetheless, on average, they have not yet reached profitability. A clearly more favourable picture can be observed in the case of the rubber and synthetic material industry. Still, their yield dispersion between small, middle and large sized firms is large and should be taken into account during the forthcoming labour negotiations and while reaching any kind of decision concerning their costs.
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Softening Competition by Inducing Switching in Credit Markets
Jan Bouckaert, Hans Degryse
Journal of Industrial Economics,
No. 1,
2004
Abstract
We show that competing banks relax overall competition by inducing borrowers to switch lenders. We illustrate our findings in a two-period model with adverse selection where banks strategically commit to disclosing borrower information. By doing this, they invite rivals to poach their first-period market. Disclosure of borrower information increases the rival's second-period profits. This dampens competition for serving the first-period market.
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Profits of East German industrial companies are slowly catching up
Hans-Ulrich Brautzsch, Udo Ludwig
Wirtschaft im Wandel,
No. 3,
2004
Abstract
The article is concerned with the development of unit costs in eastern and western German manufacturing firms from the early 90’s onwards. By 2001 unit costs in the east had fallen almost to the corresponding western level, which in part is due to the suspension of the existing labour agreements in the second half of the 90’s. Nonetheless, the rate of return in the east remains smaller than in the west, which is mainly induced by the high costs of rebuilding the capital stock. It follows that unit labour costs can not be the sole basis for the wage bargaining process.
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Promotion of investment in East Germany: Who profits from it?
Andreas Stierwald
Wirtschaft im Wandel,
No. 3,
2004
Abstract
Im Rahmen der Investitionsförderung fließen jedes Jahr mehrere Milliarden Euro als Finanzhilfen oder Steuervergünstigungen in die neuen Länder. Dabei unterliegt das System der Investitionsförderung ständig neuen Anpassungen. So wurde beginnend im September 2003 im Ergebnis der Fusion der DtA und KfW zur KfW-Mittelstandsbank das Förderangebot erheblich gestrafft. Ab Januar 2004 sieht der Multisektorale Beihilferahmen der Europäischen Kommission ein Herabsetzen der Förderintensität für große Investitionsvorhaben vor. Darüber hinaus steht die Verlängerung der Investitionszulage für zwei weitere Jahre (bei gleichzeitiger Verengung der Fördermöglichkeiten) unmittelbar bevor.
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Investment, Financial Markets, New Economy Dynamics and Growth in Transition Countries
Albrecht Kauffmann, P. J. J. Welfens
Economic Opening Up and Growth in Russia: Finance, Trade, Market Institutions, and Energy,
2004
Abstract
The transition to a market economy in the former CMEA area is more than a decade old and one can clearly distinguish a group of relatively fast growing countries — including Estonia, Poland, the Czech Republic, Hungary and Slovenia — and a majority of slowly growing economies, including Russia and the Ukraine. Initial problems of transition were natural in the sense that systemic transition to a market economy has effectively destroyed part of the existing capital stock that was no longer profitable under the new relative prices imported from world markets; and there was a transitory inflationary push as low state-administered prices were replaced by higher market equilibrium prices. Indeed, systemic transformation in eastern Europe and the former Soviet Union have brought serious transitory inflation problems and a massive transition recession; negative growth rates have continued over many years in some countries, including Russia and the Ukraine, where output growth was negative throughout the 1990s (except for Russia, which recorded slight growth in 1997). For political and economic reasons the economic performance of Russia is of particular relevance for the success of the overall transition process. If Russia would face stagnation and instability, this would undermine political and economic stability in the whole of Europe and prospects for integrating Russia into the world economy.
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Unit labor costs and competitiveness - a micro econometric analysis for East Germany
Harald Lehmann
IWH Discussion Papers,
No. 180,
2003
Abstract
The paper stresses the value of unit labour costs as an indicator of competitiveness. It is assumed that there are different advantages by using microeconomic data which additionally allow the use of panelregressive methods. The findings for East German enterprises in the manufacturing industry (1998 to 2000) are that unit labour cost are useful for explaining the profit rate. This indicates that East German firms are facing in-price competition which depends clearly of labour costs. But unit labour costs do not explain the success on supraregional markets which are marked by non-in-price competition.
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EU Eastern Enlargement and Structural Change: Specialization Patterns in Accession Countries and Economic Dynamics in the Single Market
Albrecht Kauffmann, P. J. J. Welfens, A. Jungmittag, C. Schumann
Diskussionsbeiträge des Europäischen Instituts für Internationale Wirtschaftsbeziehungen (EIIW), Bergische Universität Wuppertal, Nr. 106,
No. 106,
2003
Abstract
This paper analyses key issues of structural change and specialization patterns in the economies of an enlarged European Union. In all transition countries we observe a shift from the agricultural and industrial sector towards the service sector in terms of employment and productivity; however, in some countries a reindustrialisation drives is observed in a late transition stage. While some countries namely the Czech Republic, Hungary, Slovakia, Poland, Estonia and Slovenia, have improved their productivity especially in medium-technology-intensive industries and may advance on the technological ladder, others remain unchanged and seem to get locked in labour-intensive industrial sectors. In the context of EU-enlargement, we expect trade creation – going along with a rise of intra-industry trade – and higher FDI-activities. Countries will have to adjust along the logic of comparative advantage, however, technological upgrading and human capital formation are fields in which government can stimulate the direction of comparative advantage. According to the Gerschenkron-hypothesis the accession countries have an “advantage of backwardness. Since accession countries have a low R&D-GDP ratio in the early transition stage rising government expenditures on research and development plus higher education is crucial. We expect the EU-15 countries in general to benefit from enlargement but gains will be asymmetric across countries: economic geography matters. Austria, Germany, the Scandinavian countries, the Netherlands, Italy and France are likely to profit more than the other members of EU-15. Germany and Austria additionally play a particularly crucial role as origins of FDI. Future research should focus on the speed and the scope of structural adjustment.
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Significant Progress in East German Machine Construction Industry
Siegfried Beer
Wirtschaft im Wandel,
No. 2,
2003
Abstract
The restructuring of the mechanical engineering industry of the new Länder has displayed clearly positive effects. Between 1997 and 2001, productivity and turnover have increased by about 25 %. Since mid 1999 the number of employees has also gone up again. Business surveys indicate an improvement in profitability. This positive development is due to an increase in competitiveness which is based on new product lines together with more effective innovation activities. Growth has also been enhanced by the enlargement and modernisation of the capital stock and a moderate movement of wages. Despite this progress the east German engineering industry as a whole does by far not reach the productivity figures of its west German counterpart. Differences explaining this gap are found in the product structure with dominating customer specific products and in the firm size with a smaller number of employees in the East.
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