A Study of the Competitiveness of Regions based on a Cluster Analysis: The Example of East Germany

This paper examines whether some East German regions have already achieved the same economic capability as the regions in West Germany, so that they are on a competitive basis with the West German regions and are able to reach the same economic level in the long run. If this is not the case, it is important to know more about the reasons for the economic weakness of the East German regions twelve years after unification. The study is based on a cluster analysis. Criteria for the cluster formation are several economic indicators, which provide information about the economic capability of regions. The choice of the indicators is based on a review of results of the theoretical and empirical literature on the new growth theory and new economic geography. The results show that most of the East German regions have not yet reached the economic capability and competitiveness of their West German counterparts so that they - from the viewpoint of the new growth theory and the new economic geography - are not in the position to reach the same economic level. According to these theories economic disadvantages are most notably the consequences of less technical progress, a lack of entrepreneurship and fewer business concentration. Under these points it is especially noteworthy that young well educated people leave these East German regions so that human capital might will turn into a bottle-neck in the near future. Only a few regions in East Germany - those with important agglomerations - are comparable to West German regions that are characterised by average capability and competitiveness, but not to those with above average economic capability and competitiveness. Even those more advanced East German regions still suffer from a slower technical progress. There are important policy implications based on these results: regional policy in East Germany was not able to assist raising all regions to a sufficient level of competitiveness. It may be more effective to concentrate the regional policy efforts on a selection of important agglomerations. This has also strong implications for the EU regional policy assuming that the accession countries will have similar problems in catching up to the economic level of the EU as have the East German regions.regional disparities, competitiveness, cluster analysis, East Germany, EU-enlargement

Effectiveness of Competition Law: A Panel Data Analysis

The paper explores what macroeconomic factors can tell us about the effectiveness of recently enacted national competition laws. Qualitative evidence suggests that numerous countries fall short in implementing competition law. Furthermore, there seems to be significant differences between countries. To examine what factors might contribute to the explanation of effectiveness of competition law panel regression analysis is used. The results indicate that the level of economic development matters, however the institutional learning curve is also relevant. Furthermore, larger countries should be more concerned with competition advocacy activities than smaller countries and it seems to be the case that the problem of capture of competition law is serious in countries with high levels of corruption.competition law enforcement, developing and transition countries

Forced to Freedom? Empirical relations between aid and economic freedom

The paper explores the relationships between economic freedom on the one side and development aid and IMF credit as approximation for conditional aid on the other side. After a short review of current literature the paper develops a simple panel regression model to evaluate the relationships. In contrast to previous research, our results allow the rejection of the hypothesis that IMF credit increases economic freedom and that development aid is not contributing to economic freedom. It could not be shown that countries can be forced to economic freedom by aid conditions. The paper discusses explanations of the empirical findings. --Aid receiving countries,economic freedom,development aid,IMF credit

Progressivity and Flexibility in Developing an Effective Competition Regime: Using Experiences of Poland, Ukraine, and South Africa for developing countries

The paper discusses the role of the concept of special and differential treatment in the framework of regional trade agreements for the development of a competition regime. After a discussion of the main characteristics and possible shortfalls of those concepts, three case countries are assessed in terms of their experience with progressivity, flexibility, and technical and financial assistance: Poland was led to align its competition laws to match the model of the EU. The Ukraine opted voluntarily for the European model, this despite its intense integration mainly with Russia. South Africa, a developing country that emerged from a highly segregated social fabric and an economy dominated by large conglomerates with concentrated ownership. All three countries enacted (or comprehensively reformed) their competition laws in an attempt to face the challenges of economic integration and catch up development on the one hand and particular social problems on the other. Hence, their experience may be pivotal for a variety of different developing countries who are in negotiations to include competition issues in regional trade agreements. The results suggest that the design of such competition issues have to reflect country-particularities to achieve an efficient competition regime.special and differential treatment, progressivity, flexibility, competition law

Forced to Freedom? Empirical Relations between Aid and Economic Freedom

The paper explores the relationships between economic freedom on the one side and development aid and IMF credit as approximation for conditional aid on the other side. After a short review of current literature on the issue of economic development, economic freedom, aid, and IMF credit, the paper develops a simple panel regression model to evaluate the relationship between “economic freedom” as dependent variable and “aid” and “IMF credit” as independent variables. The estimation is based upon data taken from the World Bank’s World Development Indicators and the Heritage Index of Economic Freedom. In contrast to previous research, our results allow the rejection of the hypothesis that IMF credit increases economic freedom and that aid is not contributing to economic freedom. The estimation results suggest that, firstly, aid is positively correlated with economic freedom, and secondly, that IMF credit is negatively correlated with economic freedom. Taking IMF credit as proxy for conditional aid, we conclude that for the period of observation it could not be shown that countries can be forced to economic freedom by aid conditions.aid, economic freedom, IMF credit, economic development

Unterschiede in der Ausstattung deutscher Regionen mit Wachstumsfaktoren: Ein Vergleich auf Basis einer Clusteranalyse

The objective of the paper is to examine regional disparities within Germany with respect to the endowment with growth factors. The study is based on a cluster analysis. Growth factors considered are innovation activity, human capital, private and public capital, and regional concentration. The results show that German regions can be classified in ten clusters with different characteristic profiles. Eight clusters consist of West German regions and two clusters comprise East German regions. There is no cluster which contains both West and East German regions. Regarding the East German clusters more precisely it can be shown that the endowment with growth factors in most of East German regions is low. This result applies also for several West German regions. However there are few East German regions particularly those with important agglomerations which have a more favourable endowment with growth factors. Nevertheless also in those regions still several weaknesses in the endowment with growth factors exist.

Olympia als Hoffnungsträger regionaler Entwicklungspolitik: Wirtschaftliche Effekte der für eine Ausrichtung der Olympischen Spiele 2012 in Leipzig geplanten Infrastrukturinvestitionen

Together with the cities of Chemnitz, Dresden, Halle and Riesa the East German city of Leipzig has applied as venue for the Olympic Games 2012. With its application Leipzig competed with four economically by far stronger West German cities (Stuttgart, Frankfurt, Düsseldorf, Hamburg). On April 12, 2003 the National Olympic Committee had to elect the national candidate for 2012 out of this bundle of five applying cities and nominated Leipzig. With the organization of this big event the city of Leipzig and its partner cities expect a strong impulse for regional development. This study tries to estimate the potential economic effects of the planned investment with regard to infrastructure. Important results: Regarding directly the job effects connected with the investment and development of the infrastructure about 3,500 additional jobs are to be expected for a period of ten years. The infrastructure investment planned so far for the Olympiad will contribute only partially to eliminate important infrastructural bottlenecks in the region. Nevertheless the planned infrastructure facilities would have the effect that the new ‘olympia region Leipzig’ would remain attractive also after 2012 as venue for large sport events.

Branchenschwerpunkte in ostdeutschen Regionen: Stark räumlich konzentriert

The study examines the spatial distribution of business activities in East Germany and exhibit in which industries the East German regions are specialised. The findings of the investigation show that in East Germany numerous industries are spatially concentrated and that the most important locations of industries and enterpise services concentrate on Berlin and on regions in Saxonia. The locations usually tie at the traditional structures or at specific potentials of the regions.

Entwicklungshilfe und ökonomische Freiheit: Besteht ein Zusammenhang?

Development aid attracts currently high public attention, e.g. because of the Millennium Development Goals of the United Nations. Thereby so-called weak factors gain importance in the debate of development policy. In this regard the establishing of enabling conditions, which allow and support economic activities is central. Economic freedom is an important concept in the discussion. The academic literature clearly suggests a positive relation between economic freedom and economic development. This is the motivation to analyze the impact of development aid on economic freedom. This contribution analysis this impact of two forms of development aid (conditional and overall aid). In contrast to expectations the results show a positive impact of overall aid and a negative impact of conditional aid on economic freedom. Economic policy should consider the positive effect of overall aid and adjust aid conditions according to domestic requirements in recipient countries to avoid negative effects on economic freedom.

Konsequenzen der EU-Erweiterung für die Regionalförderung in Ostdeutschland

Consequences of EU enlargement for regional policy in East Germany EU enlargement will change the status of regions currently assisted by EU regional policy. A number of regions will probably lose their status as “Objective 1 Region” and will hence have to exist without EU regional policy funding. Furthermore it has to be assumed that the EU will additionally reduce the maximal permitted regional aid rate for investment in the same regions. Most regions in the East German Länder will be affected by these changes. A “phasing out” of such Objective 1 Regions could ease the adjustment pressures. In anticipating to the probable reduction of the regional aid rate for investment, the development of infrastructure should already today be intensified in order to alleviate locational disadvantages as far as possible.