Intra-industry trade between European Union and Transition Economies. Does income distribution matter?
Hubert Gabrisch, Maria Luigia Segnana
IWH Discussion Papers,
No. 155,
2002
Abstract
EU-TE trade is increasingly characterised by intra-industry trade. For some countries (Czech Republic), the share of intra-industry trade in total trade with the EU approaches 60 percent. The decomposition of intra-industry trade into horizontal and vertical shares reveals overwhelming vertical structures with strong quality advantages for the EU and shrinking quality advantages for TE countries wherever trade has been liberalised. Empirical research on factors determining this structure in an EU-TE framework has lagged theoretical and empirical research on horizontal trade and vertical trade in other regions of the world. The main objective of this paper is, therefore, to contribute to the ongoing debate over EU-TE trade structures, by offering an explanation of intra-industry trade. We utilize a cross-country approach in which relative wage differences and country size play a leading role. In addition, as implied by a model of the productquality
cycle, we examine income distribution factors as determinates of the emerging
EU-TE structure of trade flows. Using OLS regressions, we find first, that relative
differences in wages (per capita income) and country size explain intra-industry trade, when trade is vertical and completely liberalized and second, that cross country differences in income distribution play no explanatory role. We conclude that if increasing wage differences resulted from an increasing productivity gap between highquality and low-quality industries, then vertical structures will, over the long-term create significant barriers for the increase in TE incomes and lowering EU-TE income differentials.
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East German exports still show high dynamics in first half of 2001
Ingrid Haschke
Wirtschaft im Wandel,
No. 16,
2001
Abstract
Since last year, growth has weakened sharply in most regions of the world, accompanied by a marked decline in world trade growth. There was a significant impact on demand and activity in the industrial countries. In contrast to that the data indicate increasing east German exports of goods. In the first half of 2001 the exports of the new states rose sharply by around 25% compared with the period of the previous year and the share of exports in GDP rose.
The export structure by regions has changed over time. At the beginning of the nineties the main customers of east German exports were still central and eastern Europe. Now almost half of the goods are delivered to EU-countries. Cars and electrical engineering products are the main export goods with a share of around 30%.
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Germany: Cyclical Improvement not Until the End of the Year
Wirtschaft im Wandel,
No. 12,
2001
Abstract
During the second quarter of 2001 German overall production stagnated. Weak global development muddied the economic prospects of firms and prevented them from rising their output and their investment activities. In 2001 gross national product will only increase by 1%; the number of unemployed will be higher than expected. Nevertheless, we advise against an increase in public expenditure that aims at stimulating the economy. Anyhow, growing public deficits, caused by cyclical movements, should be accepted. In order to increase employment labour market reforms become more urgent.
In East Germany, currently even a decline in gross national product cannot be excluded. After the first period of restructuring, which has been accompanied by structural problems, cyclical movements become more important. In addition, economic stagnation burdens labour markets. Nonetheless trying to stimulate the East German economy by government spending programmes does not seem to be a viable strategy. From the cyclical point of view they are not very efficient and concerning structural problems they are no solution.
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Discussion of IWH theses on EU regional structural policy – Report on a Brussels Round Table on Regional Policy in Europe
Martin T. W. Rosenfeld
Wirtschaft im Wandel,
No. 7,
2001
Abstract
Mit der EU-Osterweiterung wird eine Reform der EU-Regionalpolitik erforderlich sein. Für Deutschland und vor allem für die neuen Länder hat dies erhebliche Bedeutung, weil Ostdeutschland derzeit als sogenannte Ziel-1-Region die höchste Förderpriorität genießt. Das IWH hat Thesen zur Regionalpolitik in Europa vorgelegt, die bei der Auftaktveranstaltung eines Brüsseler „Round Table on Regional Policy in Europe“ präsentiert und diskutiert wurden.
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Regional structural policy in an enlarged EU: A reform proposal
Hubert Gabrisch, Joachim Ragnitz
Wirtschaft im Wandel,
No. 6,
2001
Abstract
Recently, the EC-Commission has presented its ideas for future cohesion policies after the enlargement of the EU by Eastern European states. By applying the actual rules in an enlarged EU, financial aid would be concentrated in the East European countries. In this article it is argued that the criteria for success to the structural funds should not be altered, but that there should be a phasing out of aid for the regions in Western Europe. Additionally, funding under the cohesion fund and the objective 2- and objective-3-shemes should be terminated to get enough financial means to finance objective-1-programmes.
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Economic Development in Saxony-Anhalt: empirical results and policy recommendations
Franz Barjak, Peter Franz, Gerhard Heimpold, Martin T. W. Rosenfeld
Wirtschaft im Wandel,
No. 3,
2001
Abstract
Though the basic economic problems are still of the same kind all over East Germany, partially considerable regional differences exist in respect to the conditions for further economic development. Therefore, detailed empirical analyses for the individual Länder and their sub-regions are necessary making economic policy recommendations. The following contribution deals with this task taking Saxony-Anhalt as an example.
A multitude of indicators is used to bring out the specific strengths and weaknesses of the economy of this state (Land) and its sub-regions. The outstanding strength of Saxony-Anhalt are the high private investment outlays which served to build a modern capital stock during the past ten years. Another fundamental strength of the Land are the universities and public research institutions. Besides these unambiguous strengths some ‘ambivalent’ growth factors exist which are characterized by strengths as well as by weaknesses. Such ‘ambivalent’ growth factors are the infrastructure and the situation of important sectors and branches of economic activity. The weaknesses of Saxony-Anhalt’s economic structure find expression especially in its low supply with human capital and entrepreneurial initiative as well as in the few research and development efforts of its firms.
The aforementioned strengths of the Land are reflected insufficiently in its economic output. Consequently some economic policy measures are proposed to bring about an improvement: Amongst other things Saxony-Anhalt should develop a clear idea of its economic development (Leitbild). Such a Leitbild could be related to the Land’s strengths or to the elimination of its major weaknesses. This also would facilitate a concentrated use of the different economic policy instruments. The latter shouldn’t only be concentrated on singular economic growth factors but also spatially, on the economically stronger sub-regions, as this can lead to larger growth effects for the entire Land. The good provision with public research institutions in Saxony-Anhalt should be used to bring about an improvement of the economic structure to a larger extent than until now. This could be done for example by means of a further strengthening of applied research vs. basic research, possibly via orienting the public research more towards the existing branches of economic activity. Finally, the Land should intensify its efforts to increase the entrepreneurial initiative in Saxony-Anhalt, e. g. by means of introducing courses in economics in its schools.
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Housing Vacancies in East German Cities: A Problem not only for Housing Policy
Peter Franz
Wirtschaft im Wandel,
No. 2,
2001
Abstract
In numerous East German cities extreme imbalances in the housing
market have developed with the consequence of extensive housing vacancies. Primarily inner city housing units constructed in the late 19th and early 20th century and housing units constructed within the period of the socialist regime are concerned. The causes for these imbalances can be found in decisions of socialist urban planning, in demographic
factors, in oversized federal promotion of new housing construction after the German unification, and in income increases of private households. The commission “Structural Change in the Housing Economy of the New Länder“, installed by the federal government, has examined this problem and submitted preliminary political recommendations on the federal level in order to reduce the housing market imbalances. The commission recommends federal subsidies for tearing off vacant housing units within a period of ten years. A measure like this raises the question how the risk can be handled that too many flats are torn down. In addition, the commission recommends to double the subsidies for households acquiring already existing flats for own use and to halve the subsidies for households investing in newly built owner-occupied housing in East Germany. These incentives to acquire existing housing units might prove too weak because of the strong preferences of East German households to live in single-family houses. Measures on the federal level can support but cannot replace necessary concrete planning and solution strategies in the vacancy-plagued cities “in situ“.
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Border regions in the European integration process – Results of an IWH conference -
Franz Barjak, Gerhard Heimpold
Wirtschaft im Wandel,
No. 5,
2000
Abstract
Den Folgen der Integration für die wirtschaftliche Entwicklung in Grenzregionen widmete sich eine Tagung des IWH am Beispiel der deutsch-polnischen Grenzregion, in der sich derzeit die Wirkungen der schrittweisen Grenzöffnung mit strukturellen Anpassungsproblemen im Zuge der Transformation überlagern. In der Regionalpolitik erweisen sich vor allem Maßnahmen als integrationsfördernd, die die Barrierewirkungen der Grenzlage beseitigen. Politikmaßnahmen, die dagegen auf Faktorpreisunterschieden und eingeschränkter Faktormobilität aufbauen, z.B. grenznahe oder grenzüberschreitende Gewerbeparks oder Sonderwirtschaftszonen, stehen eigentlich längerfristig dem Integrationsgedanken entgegen.
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Regional analysis of East Germany: A comparison of the economic situation of states, districts, and municipalities
Franz Barjak, Peter Franz, Gerhard Heimpold, Martin T. W. Rosenfeld
Wirtschaft im Wandel,
No. 2,
2000
Abstract
A decade after the German unification we look at the extent of economic differentiation within East Germany. This is achieved by help of a set of selected statistical indicators for the years 1991 to 1998. Comparisons are drawn a) between the East German jurisdictions and b) between West and East German jurisdictions. On the federal state (Laender) level it can be shown that each state has developped its own specific economic profile. Brandenburg is characterized by a positive net migration (suburban function for Berlin), relatively low unemployment and high GDP values, but relatively low entrepreneurial activities. Saxony has achieved the lowest unemployment, a good endowment with human capital, modern industrial technology, infrastructure, and entrepreneurial activities. Special features of Thuringia consist of a relatively large number of patent applications and a stable industrial base. The economic state of Mecklenburg-Vorpommern is characterized by low industrial investment, negative net migration, and high unemployment. A special feature of this federal state is the intense investmenr in tourist services. Saxony-Anhalt registers the highest decrease in the numbers of industrial workers between 1991 and 1998 and the highest unemployment. On the other side it shows the highest amount of investment, especially in chemical industry and in mineral oil processing.
On the county level four clusters can be identified by means of a cluster analysis: A “cluster of counties with severe economic weaknesses” with a bias in the regions indutrialized in an early stage, a “cluster with a high human capital potential and suburbanization loss” consisting of 21 cities, a “cluster of counties with good economic results” predominantly surrounding the larger cities, and a “cluster of counties with SME growth potential” concentrating in Thuringia and Saxony.
The results at the city level show that the larger cities above 100.000 inhabitants, especially Dresden and Leipzig, do better than the smaller cities. Jena in Thuringia has specialized as a location for R&D, Zwickau in Saxony as a location for the automobile industry. Altogether the economic differences between the East German federal states, counties, and cities still are less pronounced than the degree of differentiation of their West German counterparts.
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The renovation of the service sector in the New Länder
Gerald Müller
Forschungsreihe,
No. 7,
1999
Abstract
Diese umfangreiche Studie zeichnet ein Bild von den besonderen Nachfrage- und Angebotseffekten, durch die der Erneuerungsprozess des ostdeutschen Dienstleistungssektors maßgeblich bestimmt wurde. Dazu zählen auf der Nachfrageseite die vergleichsweise niedrigen Einkommen in den neuen Bundesländern sowie die Ost-West-Transfers und auf der Angebotsseite die beruflichen Qualifikationen der Erwerbspersonen.
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