EXPERIENCE OF PRIVATIZATION IN EASTERN GERMANY*

ABSTRACT^**: The analysis of the experience of privatization in Eastern Germany shows that the boundaries between the private and public sectors will become increasingly blurred, with the public sector becoming more like the private sector. One may also expect that employment will fall and productivity greatly increase. The legislature's urge to regulate everything will ultimately subside but the public sector will continue to be of vital importance for the economy as a whole. A modernized public sector will be able to deploy its services to make an important contribution to economic growth and employment.     

Energy taxation: Reasons for discriminating in favor of the production sector

If a small open economy wishes to restrict it's greenhouse gas emissions, it has to decide whether to impose uniform taxes on all polluters or to resort to a discriminatory policy. In practice, countries tend to impose higher taxes on households and to tax the industrial sector more leniently. This paper identifies conditions under which this is efficient. It is shown that an efficiency maximizing tax planner discriminates in favor of the production sector if (i) there are restrictions on the taxation of lump-sum income or if (ii) labor supply exerts market power.     

Regional service clusters and networks. Two approaches to empirical identification and development: the case of logistics in the German port city‐states Hamburg and Bremen

This article discusses two approaches to the identification and measurement of regional clusters and its networks in ‘cross‐sectoral’ services which are not available through official industrial statistics. The first approach is a ‘secondary‐statistical’ one consisting of a firm‐based blending of two separate official statistical data‐sets, industrial and ‘functional’ (that is, the professions practised within firms). Thus, a service ‘cross‐sector’ is identified across manufacturing and service industries. In the matrices resulting, weights are attached in an expert survey to the numbers of employees to aggregate the ‘real’ logistics ‘cross‐sector’. This is applied to the two German port city‐states, Hamburg and Bremen. The second approach is ‘primary‐statistical’, based on a small firms survey which generated data on ‘functional’ supplier relations (the cluster) and on project‐based ‘strategic’ cooperations (the networks within that cluster). This follows a two‐stage model of emerging clusters and ‘its’ networks. This data‐set is combined with the firms’ affiliations to branches, firm size, age and sales growth classes, in order to connect information with the industry statistics. Also, the net densities and centrality structures are calculated. The combined information provides indications of the relevance of the service cluster and its networks as factors of future regional development. The latter approach is applied to the State of Bremen only. Two results appear to be transferable beyond the German cases: first, the two approaches improve the knowledge about policy‐relevant ‘cross‐sectors’, clusters and networks; and second our knowledge about service, namely logistics, clusters and networks (for which port regions are prominent nodes) is improved. Finally, some implications for regional cluster strategies are discussed.     

Sources of exchange rate fluctuations with Taylor rule fundamentals

This paper investigates the sources of exchange rate fluctuations when monetary policy follows a Taylor rule interest rate reaction function. We first present a simple dynamic exchange rate model with Taylor rule fundamentals which is triangular in the long-run impacts of shocks to the output market, the interest rate differential, and the Taylor rule. We then proceed to assess the relative importance of various shocks in exchange rate determination by estimating a structural VAR with long-run identification restrictions based on the triangular structure of the model. We find demand shocks to be less important than in earlier VAR studies, with both supply shocks and nominal shocks explaining a substantial part of real exchange rate fluctuations.     

Social Economics and Evolutionary Institutionalism Today

This paper discusses theoretical and methodological elements that constitute social economics. It also considers those elements for evolutionary (Veblenian) institutional economics. It investigates how these “heterodoxies” may further converge. Such convergence would probably not trigger a complete unification, but lead to a broadly defined common research program and a strategy for joint “heterodox” survival, in face of the ranking game of the neoclassical “mainstream” and of the dominant powers supporting it as the discipline providing ideological legitimization. A common denominator of “heterodoxies” in terms of real-world orientation, direct interdependency and interaction of agents (social decision situations), appropriate complexity, and the treatment of values is drafted. Theoretical concepts discussed include complex and open systems, individual agency, institutions, embeddedness, networks, social reform, and process orientation. Formal methodological developments considered are complex modeling, game theory, or computer simulations. We arrive at a more formal common basis, which we term socio-economics. We also consider the relations of evolution and institutions, the institutional dichotomy, and the theory of institutional change. The monism of the “market” of the “mainstream” turns out to dissolve into the institutional diversity of real-world network forms, which helps explaining real-world forms of markets, hierarchies, or spatial clusters. Focuses of “heterodox” convergence will have to be the related “microfoundations” and “macrofoundations” projects, integrating an interdisciplinary “naturalistic” approach to genetic-cultural co-evolution of cooperation, and social reform. While modern socio-economics makes “heterodoxies” leading in economic research, their future still appears open between ideological cleansing and extinction through the mainstream, and proactive paradigmatic pluralism.