Re-Bundling and the Development of Hollow Clusters in the East German Chemical Industry

Abstract

After the reunification, drastic economic restructuring processes occurred in East Germany due to a double transition: the transformation of the political and economic system, and the Fordist crisis associated with ongoing globalization processes. The challenges and shifts were particularly strong in the chemical industry, which had developed a structure of mass production characterized by an unsustainable exploitation of natural and economic resources. Drawing on a conception that views transformation and restructuring as a process of regional ruptures and re-bundling, rather than one that focuses on the lock-in of old industrialized regions, this article investigates the extent to which restructuring activities have been able to generate self-sustaining regional economies and networks in the East German chemical industry.The article is based on empirical research conducted in the regions of Leuna, Schkopau and Bitterfeld-Wolfen, which provides evidence that restructuring in the chemical industry did not create fully fledged clusters with strong interfirm linkages.Although the regional economies of the East German chemical industry were well linked to West Germany and to international markets through corporate ties, networks for learning and innovation remained weak.The development of these ‘hollow clusters’ was due to the persistence of a small industry basis, the dominance of branch operations with few local ties, and the limited importance of start-up firms. Such conditions, consequently, limit the prospects for growth in the East German chemical industry, suggesting that more diversified regional policies must be developed in the future.