The Investment Diversion Effects of German Unification

Geoffrey Pugh

Chapter 5 in The German Currency Union of 1990, 1997, pp 87-98 from Palgrave Macmillan

Abstract: Abstract In 1990 and 1991, during the initial stages of German unification, there was some fear — for example, in the Iberian countries as well as by local development agencies in the UK — that investment in East Germany would substitute for West German foreign direct investment (FDI).2 In its 1992 annual report, however, Germany’s Council of Economic Experts considered that in spite of German unification opening up ‘a whole new field for promising investment’ it was ‘noteworthy that it has not led to a change in long-term capital flows’ (‘Kapitalverkehr’ — which includes FDI) (Jahresgutachten 1992/93 des Sachverständigenrates (Annual Report of the Council of Economic Experts 1992/1993) — henceforth JG — 1992, p. 185). This chapter assesses the extent to which investment diversion constitutes a significant part of the external effects of unification on Germany’s EU partners.

Keywords: Foreign Direct Investment; Total Investment; Enterprise Sector; Economic Expert; Unit Elasticity (search for similar items in EconPapers)
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-25368-5_5

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DOI: 10.1007/978-1-349-25368-5_5

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