The Hartz-Commission recommends the reduction of unemployment by increasing the efficiency of the labour bureau, increasing the number of low-wage jobs and subsidising firms which employ unemployed. In addition benefits especially for long-term unemployed should be cut. The hope to cut unemployment by these measures by two million until 2005 is far to optimistic. The theoretical basis of the Hartz-proposals are weak. It is not seen that changes in the structure of wages or changes in distribution generally modifY the structure of relative prices and the technology. Lower wages in these case may not lead to higher employment. The Hartz-proposals completely neglect macroeconomic dimensions of economic policy and completely concentrates on labour market flexibility and higher efficiency of the labour bureau.
For countries of the Global South, global value chains offer an opportunity to integrate into international trade and to industrialise relatively easily. However, in this contribution, we argue that this is not sufficient for a catching-up development, i.e. to reach the GDP per capita levels of the countries of the Global North. On the contrary, there is a risk that countries will remain trapped in low value-added activities. The theoretical argument is supported by case studies of four industries in six countries. For catching-up, countries need comprehensive horizontal and vertical industrial policy.
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