Will East Germany Become a New Mezzogiorno?

Andrea Boltho, Wendy Carlin and Pasquale Scaramozzino

No 1256, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Despite massive regional policy efforts, GDP per capita in Southern Italy has only briefly converged on Northern Italian levels (during the 1960s). Failure since then is associated with a policy switch from investment towards income maintenance, with reduced wage sensitivity to regional labour market conditions and with increases in rent-seeking opportunities and corruption. East Germany’s early experience of rapid wage and income, but not productivity, convergence raised fears that a Mezzogiorno scenario could be repeated. Since then, however, investment has been successfully encouraged, wage setting has become more flexible and productivity growth has risen. Given a more favourable non-economic environment as well, the prospects for East German convergence are now more promising.

Keywords: Convergence; Regional Development; Regional Economic Policy (search for similar items in EconPapers)
JEL-codes: O57 R12 R58 (search for similar items in EconPapers)
Date: 1996-02
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Citations: View citations in EconPapers (20)

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Related works:
Chapter: Will East Germany become a new Mezzogiorno? (1999)
Journal Article: Will East Germany Become a New Mezzogiorno? (1997)
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