Foreign Subsidiaries in the East German Innovation System – Evidence from Manufacturing Industries
Jutta Günther, Björn Jindra, Johannes Stephan
IWH Discussion Papers,
No. 4,
2008
Abstract
This paper analyses the extent of technological capability of foreign subsidiaries located in East Germany, and looks at the determinants of foreign subsidiaries’ technological sourcing behaviour. The theory of international production underlines the importance of strategic and regional level variables. However, existing empirical approaches omit by and large regional level factors. We employ survey evidence from the “FDI micro data- base” of the IWH, that was only recently made available, to conduct our analyses. We find that foreign subsidiaries are above average technologically active in comparison to the whole East German manufacturing. This can be partially explained by the industrial structure of foreign direct investment. However, only a limited share of foreign subsidiaries with R&D and/or innovation activity source technological knowledge from the East German innovation system. If a subsidiary follows a competence augmenting strategy or does local trade, it is more likely to source technological knowledge locally. The endowment of a region with human capital and a scientific infrastructure has a positive effect too. The findings suggest that foreign subsidiaries in East Germany are only partially linked with the regional innovation system. Policy implications are discussed.
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Export Promotion Needs the Disclosure of Industrial Potentials – A Case Study for the Federal State of Thuringia
Udo Ludwig, Brigitte Loose, Cornelia Lang
Wirtschaft im Wandel,
No. 5,
2008
Abstract
In countries and regions with weak domestic markets, the orientation towards external markets plays an important rule. This applies even more for economies emerging from the transformation process from a state to a market economy with a small export sector and a continuous decline in the number of residents. The federal state Thuringia presents such an example. There is still a large gap in exports compared to Germany as a whole. The paper deals with the role of exports in economic development and economic measures to increase the export activities of small and medium-sized companies (SMEs) in Thuringia. The study is based on a survey among SMEs in Thuringia on the performance of exporters and non-exporters. One of the main findings shows that export promotion was important only for one among three exporting companies during the last three years. That speaks for the confidence of the firms in their own power. The most measures used to implement or advance export activities are participation in a fair, information sessions on foreign markets and two general instruments to support companies: investment and innovation stimulation. As a result, economic measures make sense, but it should not depend on the age or the size of a company. Besides, the support should not only be given by department of foreign trade, but also by other departments. Finally, especially newcomers should be supported to entry foreign markets.
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Regional origins of employment volatility: evidence from German states
Claudia M. Buch
CES IFO Working Paper No. 2296,
2008
Abstract
Greater openness for trade can have positive welfare effects in terms of higher growth. But increased openness may also increase uncertainty through a higher volatility of employment. We use regional data from Germany to test whether openness for trade has an impact on volatility. We find a downward trend in the unconditional volatility of employment, paralleling patterns for output volatility. The conditional volatility of employment, measuring idiosyncratic developments across states, in contrast, has remained fairly unchanged. In contrast to evidence for the US, we do not find a significant link between employment volatility and trade openness.
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The Achilles Heel of the EMU: The Labour Markets
Hubert Gabrisch
One-off Publications,
No. 1,
2008
Abstract
Recent diverging labour cost developments among EMU countries, affecting the trade and inflation position of each country, raise some doubts regarding the equal distribution of costs and benefits of shocks among the member countries and, hence, the long term stability of the Euro.
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Oil Prices and International Trade: How Petrodollar Recycling Affects the Industrialised Countries
Götz Zeddies
Wirtschaft im Wandel,
No. 4,
2008
Abstract
Since 2004, prices for crude oil nearly tripled at international commodity markets. In the wake of the oil crises of the 1970s and ‘80s, numerous empirical studies analysing the macroeconomic effects of sharp increases in commodity prices were carried out pointing at the risks of oil price rises for GDP growth in oil-importing countries. However, in most of these analyses, the impact of oil price increases on international trade of oil-importing countries, which gained in importance in the course of globalisation, is considered only marginally. This is especially the case for the additional revenues of oil-exporting countries spent in large parts for imports from and investment in the industrialised economies.
The present article examines the impact of oil price increases on merchandise exports and imports of single oil-importing industrialised countries. The results show that the curbing effects on merchandise exports are lower than on imports. Whereas import demand responds disproportionally high on the decline in consumption and investment in consequence of oil price increases, the effects on merchandise exports are ambivalent. On the one hand, exports to oil-importing trading partner countries decline due to the local economic downturns, but on the other, exports to oil-exporting countries sharply increase. As a consequence, the negative impact of rising oil prices on macroeconomic activity in oil-importing countries is lowered by the external sector due to growing net exports.
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A Minimum Wage of 7.50 Euro per Hour Does Particularly Affect Jobs in Business Related Services
Hans-Ulrich Brautzsch, Birgit Schultz
Wirtschaft im Wandel,
No. 3,
2008
Abstract
In the present public debate on the implementation of a minimum wage, different proposals concerning its design and level are discussed. Often, a minimum wage of 7.50 euro per hour is mentioned. Thereby, it is widely unknown how many employees do earn less than 7.50 euro per hour in different branches. Their jobs could be affected by the introduction of a minimum wage. By means of data of the German Socio-Economic Panels Study, it can be shown that the shares of the low-income earners are considerably high in some branches. Especially in Eastern Germany, in branches like retail trades as well as business related services many employees earn less than 7.50 euro per hour. Wage increases on the demanded minimum level would probably cause employment losses in these labour-intensive branches.
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The European Emissions Trading System: What Have We Learned so Far?
Wilfried Ehrenfeld
Wirtschaft im Wandel,
No. 3,
2008
Abstract
The IWH occupies with the consequences of the emission trading for the effected companies. The first period of the European Emission Trading System was conceived as a learning phase during which two problems occurred: The first and most obvious one was the surplus of certificates. The incentives to invest in the mitigation of CO2 can therefore be considered to be low. The second problem resulted from the allocation which was entirely for free. While electricity customers had to bear the main financial burden, electricity producers profited as the certificate-prices were obviously added to the electricity-prices as opportunity costs. The analysis comes to the conclusion that it was right to shorten the amount of certificates on the EU-level for the second trade period and to establish the partly sales or auctioning of certificates in German legislation. Furthermore, the simplification of the allocation method in Germany can be considered to be a progress.
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The Stability of Bank Efficiency Rankings when Risk Preferences and Objectives are Different
Michael Koetter
European Journal of Finance,
No. 2,
2008
Abstract
We analyze the stability of efficiency rankings of German universal banks between 1993 and 2004. First, we estimate traditional efficiency scores with stochastic cost and alternative profit frontier analysis. Then, we explicitly allow for different risk preferences and measure efficiency with a structural model based on utility maximization. Using the almost ideal demand system, we estimate input- and profit-demand functions to obtain proxies for expected return and risk. Efficiency is then measured in this risk-return space. Mean risk-return efficiency is somewhat higher than cost and considerably higher than profit efficiency (PE). More importantly, rank–order correlation between these measures are low or even negative. This suggests that best-practice institutes should not be identified on the basis of traditional efficiency measures alone. Apparently, low cost and/or PE may merely result from alternative yet efficiently chosen risk-return trade-offs.
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Is a Centralisation of Local Governmental Structures an Appropriate Way to Ensure an Efficient Provision of Local Public Services? Findings from Case Studies in the State of Saxony-Anhalt
Gerhard Heimpold, Martin T. W. Rosenfeld
Wirtschaft im Wandel,
No. 1,
2008
Abstract
Choosing the appropriate organisational model for local government (i. e. centralised vs. federal model) forms an essential challenge for local communities. Against the background of Fiscal Federalism, a trade-off between the two models mentioned can be expected: Though the centralised model may bring up economies of scale and scope, the federal form of local government may have advantages, too, for instance regarding the extent of civil participation. The article has the intention to answer the question how the degree of centralisation/decentralisation of local governmental organisation affects the provision of services of public interest. The article is based on case studies conducted in ten municipalities located in the State of Saxony-Anhalt, Germany. The government of Saxony-Anhalt intends to implement a reform project targeted at the modernisation of local governmental organisation. The basic reform idea is to transform the local governmental structures from a situation (at the beginning of 2008) where a co-existence of centralised and federally organised municipalities is given towards a future situation where the centralised model should be dominating. In line with the expectation derived from theory, the empirical findings do not draw a picture, which is unequivocally in favour either of the centralised or of the federal model. However, the reform of modernisation of local governmental organisation should remain on the agenda, especially due to a shrinking population in the rural parts of Saxony-Anhalt. This could support the state government’s plans of a more centralized organisation of local government. But this would mean to give up the advantages of the existing federal model of local government. Therefore, in addition to the centralised model favoured by the state government, politicians in Saxony-Anhalt should look for the possibility of an alternative “third” model, which tries to combine the advantages of economies of scale with a greater degree of civil participation.
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Globalisierung und Beschäftigung – eine Untersuchung mit der Input-Output-Methode.
Udo Ludwig, Hans-Ulrich Brautzsch
IMK Studies Nr. 1/2008,
No. 1,
2008
Abstract
In the course of globalization imports play a more and more important role as inputs for national production. In the wake of this development, domestic products are substituted by imported goods and jobs are moved abroad. However, this enables domestic companies to become more competitive and to improve their position in national and international markets. Applying input-output techniques this paper shows that, although imports have risen considerably, the increase in domestic production induced by exports had an overall positive impact on the German economy. This holds not only for the trade balance of production sectors that are oriented to export activities, but for the trade balance as a whole. Overall, high export surpluses were accompanied by increases in value added. Furthermore, especially in the second half of the last decade employment benefited much; while the rising import of intermediate and finished goods has caused many job cuts, on balance the increase in employment in the wake of the strong export expansion has outdone the losses.
Even though many industrialized economies in Europe have made similar experiences, the impacts on job markets differed considerably. For example, while the strength of the increase in employment in the Netherlands was similarly to that in Germany, labour market improvements in France were much weaker, not least due to noticeably lower export surpluses.
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