Do border economies generate comparative advantages for small- and medium-sized enterprises? Evidence from the Maquiladora industry

Maquiladora assembly emerged to solve a specific problem in a specific region. In the mid 1960s, it was designed to absorb unemployment and to foster industrialization at the US-Mexican border. In the course of its development, it developed considerable dynamics with respect to both regional distribution and technological diversification. Beyond initial intentions, maquiladora assembly proved to be a powerful instrument to foster modernization and international integration of the Mexican economy. Maquiladora assembly is based on factor price differentials and a favourable location with respect to the US-market. It has been developed by private agents learning to tap these potentials. They successfully intensified labour division among themselves. Most importantly, they invented so-called Shelter Plan arrangements as privately marketed services to overcome risk barriers to international integration. A passive, i.e. liberal stance of economic policy proved to be supportive. The implication for economic policy in transformation economies is that an adequate assignment of responsibilities among market and state is at least as important as efficient labour division among private agents.

Foreign investors' activities in Eastern Germany motivations and strategies

The paper analyses foreign investors' activities in East Germany in the context of privatization. Based on FDI theories it attempts to explore their motivations and strategies by investigating their home countries as well as their target industries. About 5 p.c. of all privatized enterprises have been acquired by foreigners. Their share in planned investment and planned employment results to be markedly larger. Foreign investors are predominantly originating from those countries which have longstanding economic relations with West Germany. The main part of foreign investment goes into manufacturing industries; into booming as well as into ailing industries. The availability of wellqualified labour appears to be of major importance for nearly all investments while contracting favourable terms of sale and taking advantage of public investment support are especially important for commitments in ailing industries. Germany's EC-membership generates further incentives such as to take advantage of the EC regulatory framework. Using East German production sites as bridgeheads to serve markets in Central Eastern Europe has been a strong motivation in the beginning but meanwhile has lost importance. Comparing foreign to West German investors, by and large their decisions seem to be driven by the same determinants.

West-East technology transfer: internalizing global external effects

Environmental pollution is a serious problem in Middle and Eastern Europe. Although most Middle and Eastern European countries since long have established extensive legislation on environmental issues, they rarely have enforced these laws. Virtually, they did not persue any effective environmental policy. Only with beginning of political and economic reforms the dimension of environmental damages has begun to be recognized, yet awareness has risen rapidly. Due to the process of political and economic opening, new opportunities for international cooperation are arising. This paper proposes a policy of internalizing the negative external effects of environmental pollution as well as the positive external effects of environmental protection. It takes up the elements of both the Pigouvian and the Coasean solution to external effects. A tax-subsidy scheme shall be used in the national context while a bargaining procedure shall be employed in the context of international cooperation. Subsidized West-East technology transfer will contribute to both improving environmental quality in all over Europe and to effectively support the process of reforms in Central-East Europe.

East-West co-operation of small and medium sized enterprises: evidence from the Berlin region

Globalization opens new opportunities also for small and medium sized enterprises (SME). However, empirical information on SMEs' international activities is still fragmented. The paper adds another piece of evidence in analyzing how Berlin SMEs are co-operating with partners in transition economies. To identify the size impact, co-operation activities of SMEs are contrasted to those of large enterprises. It is explored where SMEs identify sources of comparative advantage, which mechanisms, which sectors and which regions they prefer to co-operate and which impediments they face. As a result, the impact of enterprise size often appears to be modified by sector adherence.

East-West co-operation of small and medium sized enterprises: evidence from the Berlin region

Globalization opens new opportunities also for small and medium sized enterprises (SME). However, empirical information on SMEs' international activities is still fragmented. The paper adds another piece of evidence in analyzing how Berlin SMEs are co-operating with partners in transition economies. To identify the size impact, co-operation activities of SMEs are contrasted to those of large enterprises. It is explored where SMEs identify sources of comparative advantage, which mechanisms, which sectors and which regions they prefer to co-operate and which impediments they face. As a result, the impact of enterprise size often appears to be modified by sector adherence

Do border economies generate comparative advantages for small- and medium-sized enterprises? Evidence from the Maquiladora industry

Maquiladora assembly emerged to solve a specific problem in a specific region. In the mid 1960s, it was designed to absorb unemployment and to foster industrialization at the US-Mexican border. In the course of its development, it developed considerable dynamics with respect to both regional distribution and technological diversification. Beyond initial intentions, maquiladora assembly proved to be a powerful instrument to foster modernization and international integration of the Mexican economy. Maquiladora assembly is based on factor price differentials and a favourable location with respect to the US-market. It has been developed by private agents learning to tap these potentials. They successfully intensified labour division among themselves. Most importantly, they invented so-called Shelter Plan arrangements as privately marketed services to overcome risk barriers to international integration. A passive, i.e. liberal stance of economic policy proved to be supportive. The implication for economic policy in transformation economies is that an adequate assignment of responsibilities among market and state is at least as important as efficient labour division among private agents

Foreign investors' activities in Eastern Germany motivations and strategies

The paper analyses foreign investors' activities in East Germany in the context of privatization. Based on FDI theories it attempts to explore their motivations and strategies by investigating their home countries as well as their target industries. About 5 p.c. of all privatized enterprises have been acquired by foreigners. Their share in planned investment and planned employment results to be markedly larger. Foreign investors are predominantly originating from those countries which have longstanding economic relations with West Germany. The main part of foreign investment goes into manufacturing industries; into booming as well as into ailing industries. The availability of wellqualified labour appears to be of major importance for nearly all investments while contracting favourable terms of sale and taking advantage of public investment support are especially important for commitments in ailing industries. Germany's EC-membership generates further incentives such as to take advantage of the EC regulatory framework. Using East German production sites as bridgeheads to serve markets in Central Eastern Europe has been a strong motivation in the beginning but meanwhile has lost importance. Comparing foreign to West German investors, by and large their decisions seem to be driven by the same determinants

West-East technology transfer: internalizing global external effects

Environmental pollution is a serious problem in Middle and Eastern Europe. Although most Middle and Eastern European countries since long have established extensive legislation on environmental issues, they rarely have enforced these laws. Virtually, they did not persue any effective environmental policy. Only with beginning of political and economic reforms the dimension of environmental damages has begun to be recognized, yet awareness has risen rapidly. Due to the process of political and economic opening, new opportunities for international cooperation are arising. This paper proposes a policy of internalizing the negative external effects of environmental pollution as well as the positive external effects of environmental protection. It takes up the elements of both the Pigouvian and the Coasean solution to external effects. A tax-subsidy scheme shall be used in the national context while a bargaining procedure shall be employed in the context of international cooperation. Subsidized West-East technology transfer will contribute to both improving environmental quality in all over Europe and to effectively support the process of reforms in Central-East Europe