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Does regional redistribution spur growth?

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  • Koetter, Michael
  • Wedow, Michael

Abstract

After the German reunification, interregional subsidies accounted for approximately four percent of gross fixed capital investment in the new federal states. We show that between 1992 and 2005 infrastructure and (small) business aid had a negative net impact on regional economic growth. This suggests that regional redistribution was ineffective, potentially due to a lack of spatial concentration to create growth poles.

Suggested Citation

  • Koetter, Michael & Wedow, Michael, 2008. "Does regional redistribution spur growth?," Discussion Paper Series 1: Economic Studies 2008,28, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdp1:7567
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    References listed on IDEAS

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    1. Mora, Toni & Vaya, Esther & Surinach, Jordi, 2005. "Specialisation and growth: the detection of European regional convergence clubs," Economics Letters, Elsevier, vol. 86(2), pages 181-185, February.
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    6. Funke, Michael & Strulik, Holger, 1999. "Regional growth in West Germany: convergence or divergence?," Economic Modelling, Elsevier, vol. 16(4), pages 489-502, December.
    7. Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, November.
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    15. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Elisabetta Fiorentino & Heinz Herrmann, 2009. "Effizienz und Wettbewerb im deutschen Bankensektor," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(1), pages 114-126.
    2. Mariasole Bannò & Valentina Morandi & Celeste Amorim Varum, 2013. "Public policy for innovation and internationalization: are they worth it?," Applied Economics Letters, Taylor & Francis Journals, vol. 20(10), pages 927-930, July.
    3. Bögenhold, Dieter & Fachinger, Uwe, 2010. "How Diverse is Entrepreneurship? Observations on the social heterogeneity of self-employment in Germany," MPRA Paper 23271, University Library of Munich, Germany.

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    More about this item

    Keywords

    Regional growth; redistribution; infrastructure; investment subsidies;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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