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The Role of the Human Capital and Managerial Skills in Explaining the Productivity Gaps between East and West

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  • Steffen, Wolfgang
  • Stephan, Johannes

Abstract

This paper assess determinants of productivity gaps between firms in the European transition countries and regions and firms in West Germany. The analysis is conducted at the firm level by use of a unique database constructed by field work. The determinants tested in a simple econometric regression model are focussed upon the issue of human capital and modern market-oriented management. The results are novel in as much as a solution was established for the puzzling results in related research with respect to a comparison of formal qualification between East and West. Furthermore, the analysis was able to establish that the kind of human capital and expertise mostly needed in the post-socialist firms are related to the particular requirements of a competitive marketbased economic environment. Finally, the analysis also finds empirical support for the role of capital deepening in productivity catch-up, as well as the case that the gaps in labour productivity are most importantly rooted in a more labour-intense production, which does not give rise to a competitive disadvantage.

Suggested Citation

  • Steffen, Wolfgang & Stephan, Johannes, 2007. "The Role of the Human Capital and Managerial Skills in Explaining the Productivity Gaps between East and West," IWH Discussion Papers 11/2007, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:iwh-11-07
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    References listed on IDEAS

    as
    1. Stephan, Johannes & Szalai, Karin, 2003. "Firm-Specific Determinants of Productivity Gaps between East and West German Industrial Branches," IWH Discussion Papers 183/2003, Halle Institute for Economic Research (IWH).
    2. repec:sae:niesru:v:111:y::i:1:p:48-61 is not listed on IDEAS
    3. A. Daly & D.M.W.N. Hitchens & K. Wagner, 1985. "Productivity, Machinery and Skills in a Sample of British and German Manufacturing Plants," National Institute Economic Review, National Institute of Economic and Social Research, vol. 111(1), pages 48-61, February.
    4. Lee, Kevin & Pesaran, M Hashem & Smith, Ron, 1997. "Growth and Convergence in Multi-country Empirical Stochastic Solow Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(4), pages 357-392, July-Aug..
    5. Canning, David, 1996. "Specialization, scale economies and economic development," Economics Letters, Elsevier, vol. 52(1), pages 95-100, July.
    6. Dr Johannes Stephan, 2004. "Evolving Structural Patterns in the Enlarging European Division of Labour: Sectoral and Branch Specialisation and the Potentials for Closing the Productivity Gap," Development and Comp Systems 0403003, University Library of Munich, Germany.
    7. Dirk Czarnitzki, 2005. "The Extent and Evolution of Productivity Deficiency in Eastern Germany," Journal of Productivity Analysis, Springer, vol. 24(2), pages 211-231, October.
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    Cited by:

    1. Nicholas Bloom & Helena Schweiger & John Van Reenen, 2011. "The Land that Lean Manufacturing Forgot? Management Practices in Transition Countries," NBER Working Papers 17231, National Bureau of Economic Research, Inc.
    2. Jozsef TOTH & Imre FERTO, 2017. "Innovation in the Hungarian food economy," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(1), pages 43-51.
    3. Bartz, Wiebke & Mohnen, Pierre & Schweiger, Helena, 2016. "The role of innovation and management practices in determining firm productivity in developing economies," MERIT Working Papers 2016-034, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    productivity gap; Central East Europe; East Germany; firm-level analysis;
    All these keywords.

    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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