East German productivity and the transition to the market economy: comparisons with West Germany and Northern Ireland
Avebury, 1993 - Business & Economics - 126 pages
This book describes the first application to a former communist bloc economy of the technique of detailed matched plant comparisons. It is of special note that the factory visits to East German plants occurred close to the start of the German monetary and economic union. As such, the authors have been able to elucidate both the performance of firms under the previous planning system and the beginnings of the transition to the market economy. Careful benchmark measures of the level of productivity in east German plants compared to counterparts in West Germany are provided (in June 1990 and June 1991). Rates of growth of output per head are indicated and sources of previous and likely future improvements reviewed. The competitive strengths and weaknesses of the firms are discussed. Attention is also given to such factors as product standards, the impact of environmental regulation, switches from Eastern European to Western markets and the suitability of premises. Firms which are judged as likely to survive the transition to the market economy are identified and further examined. The explanations of the East German firms' comparatively low level of productivity are considered; particularly the role of physical and human capital. Various aspects of the machine stock are described; e.g. comparative age, level of technology, country of origin, balance, appropriateness, viability (given various levels of labour costs) and ease of maintenance. The number and quality of skilled persons at various levels of hierarchy are measured. The strategies adopted to supplement East German skills with West German know-how are described. Implications for industrial and regional policy in Germany are drawn. There is also an attempt to apply lessons to other low productivity economies in Eastern Europe and in the EC (particular attention is given in this respect to the case of Northern Ireland).
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achieved added per employee added per head amongst average business services clothing command economy comparative productivity comparisons competitiveness convergence Czechoslovakia decline Dornbusch and Wolf east German companies east German economy east German firms east German managers east German manufacturing east German plants east German sample eastern Europe eastern European economies EG WG employment engineering estimated extent factors firms in Northern Food Furniture GEMU Germany and Northern given growth Hitchens Hungary improvement industrial policy investment Ireland and east labour force low productivity machine stock machinery market economy market failure Meister miscellaneous trades Northern Ireland firms OECD physical productivity planned economy potential pre-unification privatised problems product quality productivity performance regions relative to west Republic of Ireland Romania sector shop-floor skills start-ups subsidisation survive Table Total sample Treuhand value added Wagner and Birnie west Berlin west German counterparts west German level whilst workers X-inefficiency