UNIVERSITÄT POTSDAM - Prof. Dr. Paul JJ Welfens

ated output growth (by contrast, in Germany output growth reduced). In the 1990s Japan
– having launched a successful economic and technological catching-up process in
the 1970s and 1980s – faced the problem of having reached the technological frontier
and for various reasons found it very difficult to switch from a strategy emphasizing
catching-up to one of global Schumpeterian leadership.
Tab 3: Labor Productivity Growth in Selected OECD Countries
1995-2000* 1977-95
US 2.2 1.4
Japan 2.0 2.6
Germany 1.8 1.9
France 1.8 1.6
UK 1.5 1.9
* Estimate
Source: OECD (2000)
Tab 4: GDP Growth in Selected OECD Countries
1995-2000* 1977-95
US 4.00 3.00
Japan 1.25 3.50
Germany 1.75 2.25
France 2.50 2.25
UK 2.75 2.25
* Estimate
Source: OECD (2000)
A modest trend output growth rate of Germany – much lower than that of the USA,
France or the UK in the second half of the 1990s – points to a specific weakness of the
German economy. Part of the slow growth puzzle might be related to German unification
and low economic growth in eastern Germany, respectively (WELFENS, 1999).
Since 1997 the growth rate of eastern Germany has been lower than in West Germany.
East Germany’s labor productivity rate achieved about 1/3 of the West German figure
in the late 1990s, but economic catching-up with western Germany, so strongly visible
in the 1990s, seems to have achieved a critical threshold. However, the West German
economy also has achieved only rather modest growth – except for the regions Baden-
Wuerttemberg, Bavaria and Hessia.
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