'Market adoption' is often blamed for inducing precipitous decline in East Germany's comparatively inefficient economy. Government transfers and private sector investments contributed toward income and investment equalization between the east and west of Germany. But the price East Germany paid...

This paper challenges the convergence hypothesis advanced by R. Barro and X. Sala-i-Martin as it is applied to explain the forces behind, patterns exhibited by and time line for German regional convergence. Exposed in some detail are the spurious neoclassical and marginalist assumptions,...