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"Die Mittelschicht ist stabil. Auch im Osten Deutschlands ist sie angekommen. Aber die obere Mitte entfernt sich. Was sind die Ursachen? Was sind die Konsequenzen?" (Autorenreferat)

The Capability Approach has been adopted as a theoretical framework for official Poverty and Wealth Reports by the German government. For the first time, this paper provides information on the use of the Capability Approach in this reporting process to international readers. We show the background and processes that might have led the government to adopt Amartya Sen's Capability Approach as a framework for the reports and describe the Capability-related structure and main contents of the recent 3rd Poverty and Wealth Report. We also explain why the extension of the Capability Approach from poverty to wealth issues in German reports may be promising also for analyses of capability deprivation in general. Finally, we discuss major shortcoming and challenges of the reporting and end with a brief conclusion.

The majority of the literature related to Amartya Sen´s Capability Approach (CA) has been devoted to questions of development and developing countries. In this paper, however, with a theoretical concept and first empirical results at hand, we shed some light on Sen´s argument that the CA is also relevant to wealthy countries (Sen, 1999, p. 6). First, we discuss the political background of CA applications in the case of Germany. Second, we sketch out a new analytical framework for the assessment of poverty and wealth in affluent countries in general from a CA perspective. Third, we show how this framework can be based on a corresponding set of feasible indicators and up-to-date representative information in the German Socio-Economic Panel Study (GSOEP). Finally, three selected empirical examples underline the resulting possibilities for analyses of gender inequalities, the unequal distribution of political participation and interdependencies between financial and nonfinancial issues of poverty and wealth within this integrative framework.

Im zweiten Armuts- und Reichtumsbericht wurde der Ansatz der Verwirklichungschancen ("Capabilities") des Ökonomie-Nobelpreisträgers Amartya Sen als neue konzeptionelle Grundlage angekündigt. Wir erörtern knapp, inwiefern Sens ethisch fundierter Ansatz eine zielführende Konzeption für die deutsche Armuts- und Reichtumsberichterstattung darstellt und skizzieren wesentliche Bestimmungsgründe der Verwirklichungschancen. Am Beispiel eines eigenen Indikatorenkonzepts auf der Grundlage der aktuellen Welle 2004 des Sozio-oekonomischen Panels (SOEP) beleuchten wir diese Bestimmungsgründe sowie einige wesentliche sozialpolitische Schlussfolgerungen mit empirischen deskriptiven Ergebnissen. Ein besonderer Vorzug des Konzepts gegenüber bisherigen Methoden ist das stimmige Zusammenspiel ethischer Gerechtigkeitspositionen mit wirtschafts- und sozialwissenschaftlichen Ansätzen sowie empirischen Konkretisierungen. Auf dieser Grundlage können Ausgrenzung und Privilegierung gesellschaftlicher Gruppen geeignet erfasst und notwendige Aspekte des Gender Mainstreaming im Kontext von Armut und Reichtum berücksichtigt werden. Die Weite des Konzepts kann zur Versachlichung der Diskussion beitragen sowie für sozialpolitische Maßnahmen wichtige Zusammenhänge zwischen finanziellen und nichtfinanziellen Beeinträchtigungen und Privilegien erhellen. ; The capability approach of Amartya Sen, who received the Nobel Prize in Economics in 1998, has recently been announced as a new conceptual framework of the German Federal Government's official Poverty and Wealth Reports. Hence, we will discuss the suitability of Sen's approach to reach the goals of these reports. Moreover, we will briefly explain the main determinants of capabilities in this context. In taking our indicator set that is based on the German Socio-Economic Panel (SOEP) 2004 as an example, we can describe empirical features of these determinants and draw some consequences for social policy. Sen's capability approach highlights the harmonious interplay between ethical theories of justice, economics, and social science as well as empirical applications. Therefore, it seems to be promising to combine Sen's capability approach with German "Lebenslagen-approaches" that are very similar. This combination enables a deeper analysis of political and social participation and includes German approaches into international debates. Further steps will make it possible to formulate capabilities more precisely.

Abstract.  Recent literature on multinational firms has focused on low productivity as a barrier to the internationalization of firms. But labour market frictions or financial constraints may also hamper internationalization. In order to assess the importance of these barriers, we present new empirical evidence on the extensive and intensive margin of exports and foreign direct investment (FDI) based on micro‐level data of German firms. First, we find a positive impact of firm size and productivity on firms' international activities. Second, labour market frictions can constitute barriers to foreign activities. Third, self‐reported financial constraints have no impact on firms' internationalization decisions. JEL classification: F23, G2

Abstract
Previous empirical work on the link between domestic and foreign investment has provided mixed results. This may partly be due to the level of aggregation of the data. In this paper, we argue that the impact of FDI on the domestic capital stock depends on the structure of industries. Using industry-level data on the stock of German FDI, we test our predictions. We use panel cointegration methods which address the potential endogeneity of FDI. We find evidence for a positive long-run impact of FDI on the domestic capital stock.