Historical Legacies of Regional Innovation Activity: The Case of East and West Germany

Abstract We investigate how 40 years of a communist regime in East Germany and the subsequent German unification affected innovation activities. The empirical evidence suggests that the benefits of integrating the two innovation systems were much greater in the West than in the East, which has resulted in an increasing gap in innovation activities between the two regions. Innovation activity in East Germany was highly concentrated in a few hot spots that have a tradition of innovation reaching back to the time before the Second World War (WWII). The innovation activities that we observe in Germany today are strongly shaped not only by separation into a socialist and a capitalist part after WWII but also by the shock transformation over the course of rapid reunification, which has had lasting effects.