Good Institutions Are Not Enough: Ongoing Challenges of East German Development

31 Pages Posted: 14 Oct 2010  

Wendy Carlin

University College London - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: October 13, 2010

Abstract

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.

Keywords: transition, institutions, East Germany, tradeables, convergence

JEL Classification: O43, O52

Suggested Citation

Carlin, Wendy, Good Institutions Are Not Enough: Ongoing Challenges of East German Development (October 13, 2010). CESifo Working Paper Series No. 3204. Available at SSRN: https://ssrn.com/abstract=1691496

Wendy Carlin (Contact Author)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
+44 20 7679 5858 (Phone)
+44 20 7916 2775 (Fax)

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