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reading summaries- pol372

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Political Science
Harald Bathelt

chapter summarys pol372- reading #10- Germany reunited: transformation of the east german economy 12/8/2012 1:29:00 PM Reading 1 Overview- o After reunification there has been drastic changes to the economy, specifically from east germany. This was because of a double transition: the transformation of the political and economic system, and the fordist crises due to the impact of globalization. This has been mainly centered around the chemical industry, which had been exploiting natural and economic resources at an unssutainble level. This article illustrates the aspect of the restructuring of activities to generate a self-sustaining regional economy within the chemical industry present in east germany. Even though the regional economies of the chemical industries in east germany were associated to west germany and even went as far as international markets through corporate ties, networks as well as the capacity to innovate was not at a good standard. These were because of a number of aspects, which ranged from the dominance of branch operations with few local ties, a small industry, and the limitations of newly operating businesses. These aspects all play a part in restricting the capacity for growth in the east german chemical industry. This inevitably should open the way for a more diversified regional policy to develop within the east german market. o Towards conceptualization: networks and, ruptures and rebundling There are 3 types of lock-in situations that can threaten regional development: 1. Cognitive lock-in which occurs if the regional actors focus too strongly on the dominant technological path 2.functional loc-in related to the existence of input-output relations 3.political lock-in due to narrow-sided political programmes systemic lock-in: characterized by a hierarchial state-planned economy which operated under drastically different institutional and organizational conditions from those of a market economy. o The state of the manufacturing regions in east germany at the time of reunification resembled that of the old industrialized regions in west germany. These were traditional single sector manufacturing regions. o Technological lock-ins are related to rigid institutional conditions and externalities. Although lock-in situations have been a source of high- economic returns over the long-run, they have also been assosiation with negative connotations. These have resulted in rigid technological and organizational structures. This is explained in terms of the power of strong ties between the economic and political actors. Specifically, this can relate to the iron and steel production in the german ruhr. o The evolution of the east german chemical industry in the post second world war era led to multiple lock-in situations. The most dramatic barrier to integrating east germany into global economic circuits relates to a systemic lock in. this was characterized by a hierarchical state-planned economy which operated under different institutional and organizational conditions from those of a market economy. o By transferring the political and economic system of east germany and replacing it with the west german system, the main obstacles to restructuring the manufacturing sector were eliminated. o The east german economy lacked the regional networks essential to economic growth and competitiveness. o One of the challenges of establishing self-sustaining growth in east german regions seemed to be the establishment of new economic networks through which learning processes could be channeled and innovation triggered. Moreover, the success of clusters not only depends on regional transaction networks and input-output linkages, but also shaped by wider knowledge flows that exist within a cluster and with its outside environment Systematic xternal linkages can be crucial in order to gain access to technological breakthroughs and avoid lock-in. The process of restructuring the east german chemical industry, was based on the involvment of multinational firms from west germany and other market economies. These firms brought access to the global technology and market environment. This involved heavy subsidies, which were supplied by the federal and lander governments. The concept of rebundling used to conceptualize the restructuring processes of the east german chemical industry after reunification, views policital reuptures and sectoral crises as situations which open up new opportunities for the formation of networks. o economic competitiveness is not just a function of a firm’s individual capabilities and competencies, but that its also shaped by the competitive environment and collective networks within which the firm operates. o A crises leads to 2 kinds of adjustment: 1. Geographical shifts As assets leave the region, 2. Sectoral/technological shifts, as assests are redeployed to the region’s other sectors and technologies. reading 2- german unification and ‘model germany’ 12/8/2012 1:29:00 PM Reading 2 Overview  Unification hurt germanys economic performance, when it had been presumed that the unification would reinforce west germany’s already strong position  Red-green government achieve little change: unification processes had contributed both to the worsening of germanys economic performance and to political stalemate over economic reform  From 1992 to 2002, germany experienced growth rates below its annual increases in productivity, resulting in rising unemployment and the weakest economic performance overall among the European union nations  The transfer of institutions to eastern germany accelerated the crises of the german model in the unified country, because it took place just at a time when model germany was beginning to lose its capacity to deliver favourable economic outcomes.  Article addresses two questions: 1. How and why the process of unification negatively affected the nations ability to sustain german model 2.why the problems and consequences of institutional transfers made it harder to reform key pillars of the model  all aspects of reform, whether in the form of direct inst. Adoption, as a consequence of extensive bargaining or as market-driven change- boiled down to the external governance of unification by the west german political and econo
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