This book rigorously explores the critical, initial stage of cluster emergence in which the seeds for further growth are sown. Whether economic growth actually occurs, however, ultimately depends on various regional conditions and the processes in place.

We analyze the effects of the unprecedented rise in trade between Germany and “the East” (China and Eastern Europe) in the period 1988–2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use...