During the economic crisis of 2008 and 2009, governments in Europe stabilized their economies by means of fiscal policy. After decades of absence, deficit spending was used to counteract the heavy decline in demand. In Germany, public spending went partially into R&D subsidies in favor of small and medium sized enterprises. Applying the standard open inputoutput model, the paper analyzes the macroeconomic effects of R&D subsidies on employment and production in the business cycle. Findings in the form of backward multipliers suggest that R&D subsidies have stimulated a substantial leverage effect. Almost two thirds of the costs of R&D projects are covered by the enterprises themselves. Overall, a subsidized R&D program results in a production, value added and employment effect that amounts to at least twice the initial financing. Overall, the R&D program counteracts the decline of GDP by 0.5% in the year 2009. In the year 2010 the effects are already procyclical since the German economy recovered quickly. Compared to the strongly discussed alternative uses of subsidies for private consumption, R&D spending is more effective.

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There is broad consensus that economic development and society welfare correlate with the effectiveness and efficiency of countries' science, technology, and innovation infrastructure. There is a broad range of actors active in all fields with diverging ambitions, missions, and aims striving for scientific, technological, and innovation excellence. Still one actor alone faces severe challenges in the respective global competition which is why increasingly clusters are formed and quipped with professional management. This raises the question if knowledge diffusion channels function more effective and efficient in organically grown self-organized channels or if targeted public policy intervention is needed to enhance these channels by means of attached cluster management. The article discusses the major conceptual features of cluster management and spillovers and the resulting implications for cluster management activities.

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This paper deals with innovation cooperation as a means to support the ongoing catch-up process of the East German economy. Against prevalent beliefs, it can be shown that East German enterprises are more often involved in innovation cooperation than West German firms, and differences in cooperation partner priorities only reflect the given structural differences between the two regions. While cooperating enterprises in East and West Germany are clearly more innovative than their non-cooperating counterparts, a productivity advantage of these firms is (so far) only observable in West Germany. Reasons for this surprising finding are discussed.

The initial opening of China and India coupled with the opening of the former socialist countries in the 1990s led to the integration of 40% of the global labour force into the world economy, causing large-scale effects regarding market integration, catching up, and income distribution. This trend has been defined as 'Shifting wealth I' (OECD, 2015). However, today, there is some uncertainty as to whether this process will continue, i.e. whether emerging economies will continue their process of technological upgrading and move from efficiency to innovation-driven growth. Whether we will observe 'Shifting Wealth II' or the further growth of emerging economies will ultimately depend on whether the productivity growth of emerging economies will be associated with further upgrades in technology 6. In addition, technology upgrading was, until recently at least, to some extent positively connected with the prevailing liberalized trade regime. Currently there are political developments around the world which represent a threat to the established trade system by way of increasing national protectionism which might impact future upgrading in one way or the other. The rise of emerging and developing economies during the 1990s and the first decade of the 21 st century has increased their share in world GDP to over 50%. This tipping point was 1 We acknowledge excellent editorial assistance of Toby Law.

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