An Economic Life in Vain − Path Dependence and East Germany’s Pre- and Post-Unification Economic Stagnation

Arbeitspapier

20 years after unification, the East German twin's economic position is relatively stagnant compared to most of the West German productivity and income variables. The strong initial takeoff until the mid-end 1990s ended at a level of 70% to 80% of the western reference. In this paper, two interdependent hypotheses are put to the test: (i) that the communist economy prior to unification was on a stagnating path contrary to what standard analyses show; (ii) that strong elements of path dependence exist and that the switch from plan to market offset the pre-unification stagnation but was not able to repair structural deficits inherited from the past. In fact, looking into West German long-term data, an extremely stable development path can be found that extends from the 19th century to the present. Thus, the analysis of the East German development path is both economically relevant and politically interesting if economic policies are to be formulated ...

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IWH Discussion Papers ; No. 10/2011

Classification and Topics

• Classification: Wirtschaft
• Subject: East Germany ; time series ; income ; institution ; product ; unification ; economic growth ; convergence ; Ostdeutschland ; Einkommen ; Institution ; Einheit ; Wachstum ; Konvergenz

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Blum, Ulrich
• Event: Veröffentlichung
• (who): Leibniz-Institut für Wirtschaftsforschung Halle (IWH)
• (where): Halle (Saale)
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/52393
• URN: urn:nbn:de:101:1-201108193498
• Last update: 10.03.2025, 11:42 AM CET