Good Institutions Are Not Enough: Ongoing Challenges of East German Development
University College London - Department of Economics; Centre for Economic Policy Research (CEPR)
October 13, 2010
CESifo Working Paper Series No. 3204
A major theme in accounts of the transitional recession and delayed convergence in post-communist economies is the role of institutions. Yet via unification, East Germany had immediate access to credible, high quality institutions. This paper argues that success in a capitalist economy depends not only on high quality institutions but also on finding one’s niche in the international division of labour. East Germany’s experience highlights the long shadow cast by the period under communism over the economy’s ability to find its comparative advantage in tradeables on a scale adequate for self-sustaining growth.
Number of Pages in PDF File: 31
Keywords: transition, institutions, East Germany, tradeables, convergence
JEL Classification: O43, O52
Date posted: October 14, 2010
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