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Why East Germany did not become a new Mezzogiorno

Carlin, WJ; Boltho, A; Scaramozzino, P; (2018) Why East Germany did not become a new Mezzogiorno. Journal of Comparative Economics , 46 (1) pp. 308-325. 10.1016/j.jce.2017.11.004. Green open access

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Abstract

Economic integration is generally thought to favour convergence in the economic performance of previously separated regions; but this is far from universally true, as the experience of the members of the Eurozone testifies. The paper considers the two sharply contrasting cases of East and West German convergence following reunification and the enduring poverty of the Italian Mezzogiorno since Italian unification a century and a half ago. In both countries, political integration delivers much higher consumption in the lagging relative to the leading region than of per capita GDP. Consumption convergence can be supported by transfers but ‘production’ convergence ultimately requires catch-up in the production of tradeables. The paper demonstrates the radically different performance of the tradeable sector in the two cases, and suggests that this may be the result of differences in labour market flexibility, in investment performance and in the social norms required for the production of complex manufacturing.

Type: Article
Title: Why East Germany did not become a new Mezzogiorno
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.jce.2017.11.004
Publisher version: http://doi.org/10.1016/j.jce.2017.11.004
Language: English
Additional information: © 2017 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved. This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Convergence; Tradeables; Labour market flexibility; Institutional quality
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10040335
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