European Economy. Economic Papers. Germany's growth performance in the 1990's

Box 3 (continued)
Regarding public infrastructure, a study by two economic research institutes (DIW and RWI)
estimated that in 2005 East Germany will still have a deficit in infrastructure relative to West
Germany of a value of between € 135 and 140 billion.
29
And this in spite of major achievements
in adding, modernising and upgrading infrastructure over the last decade. A new calculation by
DIW arrives at a lower value of € 80 billion.
30
Figure B3.4 illustrates that the public capital
stock per inhabitant is already higher than in the West in several public functions, in particular
in social institutions, while there are major deficits in waste water treatment, roads, universities
and schools. Notably, the first are usually labelled as “soft” factors of location whereas many of
the latter tend to be the “hard” factors which are indispensable for attracting investment.
Figure B3.4: Public gross fixed capital stock of East German Länder and Gemeinden by
 
functions in % of West German Länder (excluding city Länder), 1999
Source: DIW/IWH/IfW 2000
A review of existing evaluation studies on the impact of active labour market policies in East
Germany arrives at the following main conclusions:
31
First, regarding measures on further training, some studies show positive results which are
however not consistent over different specifications regarding time and target groups. Most
microeconomic studies find no significant impact of further training although macroeconomic
analyses on Germany as a whole find a reduction of regional long-term unemployment.
Second, for work provision schemes (
Arbeitsbeschaffungsmaßnahmen
, “ABM”), only one study
arrives at positive effects while three other studies find significantly negative effects.
Macroeconomic analyses of Germany as a whole find a positive impact of ABM.
Given the available data and the methodological heterogeneity of the studies, the authors
conclude that the impact of training measures and ABM is at best low, although not
29
DIW/IWH/IfW 2000, p.24, based on DIW/ifo/RWI/ILS: Solidarpakt II – Infrastrukturelle Nachholbedarfe
Ostdeutschlands, March 2000, unpublished.
30
Cf. Vesper 2001
31
Fitzenberger/Speckesser 
2000
20.4
53.2
56.1
61.1
76.6
79.7
82.4
92.5
98.5
103.8
110.9
119.4
146.9
0
20
40
60
80
100
120
140
160
local service
transport & telecom
universities
schools
sports etc. 
food, agriculture etc.
legal system
housing
police
administration
hospitals
social security
culture

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