The Effect of Integration on the Change of Technological Knowledge Structure: Based on the German Reunification

Abstract

The reunification of Germany is often regarded as a miracle of the 20th century but this miracle ended up politically. After reunification, Germany went through an unexpected deep recession despite the expectation of fast convergence and economic prosperity. To elucidate the reason for the tardy and stagnant convergence, previous economic studies have focused on the reallocation of input factors such as capital accumulation and labor thinning, the observation of the convergence phenomenon and misguided monetary policy. From a national innovation system (NIS) view, they have failed to adopt a systemic approach considering the interaction between societal change and the role of technology. Investigation of the change in the technological knowledge structure would be a good starting point to understand the effect of economic integration on Germany. In this study, the technology structures were constructed by a technology network using EPO patent data. I then figured out the competitive technologies of a country and considered the interaction among technologies via knowledge spillover and the movement of agents after reunification. The topologies of technology structure, relative degree of technology concentration and technological distance/similarity were examined for GDR, FRG and Germany. The analysis results showed that the technology structure of Germany covered that of FRG. A difference existed in the relative degree of development but the distribution of hub technologies were similar among the three countries. This might have had potential to enable the absorptive capability of GDR to adopt advanced technologies of FRG. The frictionless integration of technology would have been possible if German policy on science and technology had stimulated investing in GDRs R&D system in areas in which GDR had superiority (e.g., chemical sector). But the technology system, institution and researchers of GDR collapsed due to the impetuous process of organizational integration and unilateral absorption to FRG after reunification. German reunification does not provide solutions but rather leaves questions and challenges for Korea in the case of unification of the Korean Peninsula. A substantial period of time must be taken to consider the relatively developed technology and highly trained human resources in the North

otherwise, Korea could miss an opportunity to achieve technological integration of the Korean Peninsula. German reunification urges Korea to be ready and prepare a strategy in advance that draws on the lessons in reunification in Germany.