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Economic Growth and Change

Economic Growth and Change

National and Regional Patterns of Convergence and Divergence

Edited by John Adams and Francesco Pigliaru

The pursuit of economic growth is at the top of every nation’s policy agenda at the end of the 20th century. This authoritative and comprehensive book goes beyond the narrowly-based convergence model of economic growth by considering global, national and regional patterns of growth from a comparative perspective.

Chapter 13: Will East Germany become a new Mezzogiorno?

Andrea Boltho, Wendy Carlin and Pasquale Scaramozzino

Subjects: development studies, development economics, economics and finance, development economics, regional economics


Page 323  13. Will East Germany become a new Mezzogiorno?*  Andrea Boltho, Wendy Carlin and Pasquale Scaramozzino1  INTRODUCTION  In both popular and academic discussion, the regional economic problems that Germany has encountered since monetary unification in 1990 have often been compared  to the North–South problem which Italy has been facing since the monetary unification of 1862. In particular, a number of writers have argued that the process of  income convergence between East and West Germany could last an inordinately long time and be very costly, thus resembling the very slow, or possibly absent,  convergence between Southern and Northern Italy over the last 130 years (Barro and Sala­i­Martin, 1991; Siebert, 1991; Hughes Hallett and Ma, 1993; Blien,  1994).  That a comparison between the two countries’ regional experiences may be warranted is suggested by Table 13.1 which presents early 1990s information on selected  economic indicators for the two areas. Both Eastern Germany and Southern Italy show significant gaps vis­à­vis the rest of the country in GDP per capita and  unemployment levels, though less so in wage levels. Both areas, if in different proportions, also rely very heavily on a net transfer of resources from the central  government. Such transfers ensure that consumption standards are relatively uniform across space, but, by the same token, they contribute to, and may even  perpetuate, a model of regional dependence. Traditionally, this has been seen as one in which the weak region runs a persistent trade deficit with the rest of the country...

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