East Germany’s Economic Development Since Unification

JENS BASTIAN Lecturer at the European Institute, Department of Government, London School of Economics and Political Science JAMES COOP Doctoral candidate at Imperial College, University of London MARC HERZOG Lecturer in Business Administration and Marketing, University College, Dublin MICHAEL HÜTHER Secretary General of the German Council of Economic Experts MICHAEL KASER Honorary professor in the Institute for German studies, University of Birmingham THOMAS LANGE Reader in Economics, Robert Gordon University, Aberdeen ERIC OWEN SMITH Senior Lecturer in Economics, Loughborough University KARL-HEINZ PAQUÉ Professor for International Economics, University of Magdeburg GEOFF PUGH Principal lecturer in European Economics, Staffordshire University Business School JOHANNES STEPHAN Doctoral candidate, Institute for German Studies, University of Birmingham RUDI VIS Labour MP for Finchley since May 1997. Formerly Lecturer in Economics, University of East London WOLFRAM WALDNER Assistant Lecturer in Law, Erlangen University

The first book in the Studies in Economic Transition series applies the theory of economic development to the economy of East Germany. Eight years after the unification of Germany, the book provides a comprehensive and much needed assessment of the transition process in the East, its impact on the German economy as a whole and the important broader lessons for European integration and enlargement. The unique economic experiment of the unification of the German economies provided an excellent opportunity for different schools of economic theory to be tested and examined. The contributors to this book take full advantage of this challenge.

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List of Tables List of Figures Acknowledgements Notes on the Contributors Introduction PART I: THE GERMAN ECONOMY AND THE NEW LÄNDER From Miracle to Crisis? The German Economy at the End of the 20th Century; K. Paqué The German Model in Decline; J. Hölscher and J. Stephan Economic Policy for the New German Länder - Supply Side Economics Needed; M. Hüther PART II: MICROECONOMIC PROBLEMS AND PRIVATISATION The Eastern Länder as a Transition Economy; M. Kaser Determinants of Entrepreneurial Success in East Germany; M. Herzog Private Property and the Transformation Process; W. Waldner PART III: NEW INSTITUTIONS AND ECONOMIC POLICY Problems of the Welfare State and the New German Länder; J. Coop and R. Vis The Institutional Architecture of an Alliance for Jobs; J. Bastian Catching Up with the West: the Achievements and Limitations of Creative Destruction; T. Lange and G. Pugh Economic Aspects of the German Unification - Lessons for European Integration; E. Smith What Can We Learn from German Unification for European Integration - Some Conceptional Issues; A. Hochberg Name Index Subject Index