Abstract
The unification of the East and West German states in 1990 initiated the
integration of two distinct innovation systems. In this process, the poorly
functioning socialist system of East Germany adopted the formal institutions and
organization of West Germany, a western-style market economy. We investigate
the effect of this integration on patenting activity by applying a difference-indifference approach. While patenting activity increased in both parts of the
country until recently, the gap between East and West Germany widened
considerably over time. This divergence in innovation activity suggests that
current East-West differences may be indirectly rooted in this socialist legacy and
the sudden shock transformation that occurred upon reunification. We also find
that the similarity of the technology profile of the East and West German
innovation systems is crucial to understand the divergence. So, East German
innovation activity fell behind especially in technologies where both East and
West Germany were specialized in before re-unification. The same applies to
technologies where only West Germany was specialized in. Our findings indicate
that integrating the two innovation systems mainly benefitted the West.
integration of two distinct innovation systems. In this process, the poorly
functioning socialist system of East Germany adopted the formal institutions and
organization of West Germany, a western-style market economy. We investigate
the effect of this integration on patenting activity by applying a difference-indifference approach. While patenting activity increased in both parts of the
country until recently, the gap between East and West Germany widened
considerably over time. This divergence in innovation activity suggests that
current East-West differences may be indirectly rooted in this socialist legacy and
the sudden shock transformation that occurred upon reunification. We also find
that the similarity of the technology profile of the East and West German
innovation systems is crucial to understand the divergence. So, East German
innovation activity fell behind especially in technologies where both East and
West Germany were specialized in before re-unification. The same applies to
technologies where only West Germany was specialized in. Our findings indicate
that integrating the two innovation systems mainly benefitted the West.
| Original language | English |
|---|---|
| Place of Publication | Groningen |
| Publisher | University of Groningen, FEB Research Institute |
| Number of pages | 65 |
| Volume | 2023001-I&O |
| Publication status | Published - 2023 |
Publication series
| Name | FEBBRI Research Reports |
|---|---|
| Publisher | FEB Research Institute |
| Volume | 2023001-I&O |