Will East Germany Become a New Mezzogiorno?
Wendy Carlin () and
No 1256, CEPR Discussion Papers from C.E.P.R. Discussion Papers
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)
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Chapter: Will East Germany become a new Mezzogiorno? (1999)
Journal Article: Will East Germany Become a New Mezzogiorno? (1997)
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