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The unfinished convergence between East and West Germany: Patterns of Scale and Agglomeration Effects in East Germany

Leister, Tim LU (2017) EKHK18 20171
Department of Economic History
Abstract
Since the economic convergence between East and West Germany has come to a halt, the lack of scale and agglomeration effects is assumed to be contributing to this trend of stagnation. This paper studies the development of patterns of these effects in East Germany with an emphasis on the German reunification and economic integration process while accounting for asymmetries between East and West. Existing literature on the reunification process, scale and agglomeration economies theory as well as agglomeration effects studies of East Germany are reviewed and interpolated with quantitative data. The findings have been put in a wider context of economic integration and new economic geography.
The findings reveal that scale and agglomeration... (More)
Since the economic convergence between East and West Germany has come to a halt, the lack of scale and agglomeration effects is assumed to be contributing to this trend of stagnation. This paper studies the development of patterns of these effects in East Germany with an emphasis on the German reunification and economic integration process while accounting for asymmetries between East and West. Existing literature on the reunification process, scale and agglomeration economies theory as well as agglomeration effects studies of East Germany are reviewed and interpolated with quantitative data. The findings have been put in a wider context of economic integration and new economic geography.
The findings reveal that scale and agglomeration economies are scarce and heterogeneously distributed across East Germany due to the Socialist mode of production and the transition period during reunification. The privatisation of the largely unproductive industrial stock in East Germany in combination with large-scale emigration have inhibited the formation of scale effects and industrial agglomeration on par with the West. Therefore, East Germany cannot exploit the effects of scale and agglomeration economies to the same degree as West Germany. It seems to be stuck in a disadvantageous position of economic asymmetry where it remains reliant on West German companies and their monetary and human capital. The urbanised core regions of the East, however, might assume a more central role in the German economy in line with their industrial past in the long term. (Less)
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author
Leister, Tim LU
supervisor
organization
course
EKHK18 20171
year
type
M2 - Bachelor Degree
subject
keywords
scale effects, agglomeration effects, economic convergence, East Germany, economic integration, new economic geography
language
English
id
8917618
date added to LUP
2017-06-21 11:24:26
date last changed
2017-06-21 11:24:26
@misc{8917618,
  abstract     = {Since the economic convergence between East and West Germany has come to a halt, the lack of scale and agglomeration effects is assumed to be contributing to this trend of stagnation. This paper studies the development of patterns of these effects in East Germany with an emphasis on the German reunification and economic integration process while accounting for asymmetries between East and West. Existing literature on the reunification process, scale and agglomeration economies theory as well as agglomeration effects studies of East Germany are reviewed and interpolated with quantitative data. The findings have been put in a wider context of economic integration and new economic geography.
The findings reveal that scale and agglomeration economies are scarce and heterogeneously distributed across East Germany due to the Socialist mode of production and the transition period during reunification. The privatisation of the largely unproductive industrial stock in East Germany in combination with large-scale emigration have inhibited the formation of scale effects and industrial agglomeration on par with the West. Therefore, East Germany cannot exploit the effects of scale and agglomeration economies to the same degree as West Germany. It seems to be stuck in a disadvantageous position of economic asymmetry where it remains reliant on West German companies and their monetary and human capital. The urbanised core regions of the East, however, might assume a more central role in the German economy in line with their industrial past in the long term.},
  author       = {Leister, Tim},
  keyword      = {scale effects,agglomeration effects,economic convergence,East Germany,economic integration,new economic geography},
  language     = {eng},
  note         = {Student Paper},
  title        = {The unfinished convergence between East and West Germany: Patterns of Scale and Agglomeration Effects in East Germany},
  year         = {2017},
}