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Economic policy interventions of a scale as effected in Eastern Germany can be expected to have a significant impact on the economy. The question whether investment subsidization as a core policy instrument is a suitable measure to initiate a self-sustaining upswing in the Eastern German economy and an improvement of living standards has been reason for dispute since the beginning of transition. Using econometric techniques, the study analyzes the effects of investment subsidies on economic structure, employment and productivity in the Eastern German industry. The study suggests that there is a need for redesigning subsidization and changing infrastructure and labor market policies.
List of contents
Setting, Aim and Scope of the Study.- Eastern German Transition and Government Policy.- Modelling the Impact of Investment Subsidies on Factor Demand and Production in the Eastern German Industrial Sector.- Empirical Implementation.- Concluding Remarks and Implications for Economic Policy.
Summary
Economic policy interventions of a scale as effected in Eastern Germany can be expected to have a significant impact on the economy. The question whether investment subsidization as a core policy instrument is a suitable measure to initiate a self-sustaining upswing in the Eastern German economy and an improvement of living standards has been reason for dispute since the beginning of transition. Using econometric techniques, the study analyzes the effects of investment subsidies on economic structure, employment and productivity in the Eastern German industry. The study suggests that there is a need for redesigning subsidization and changing infrastructure and labor market policies.
