Integrating the East German States into the German Economy: Opportunities, Burdens and Options
There was rarely ever such a wide range of opinions and forecasts on the future development of a country or a region as one can presently observe for the former GDR. Some people argue that, after a period of transition, output will grow at high rates, repeating, if not exceeding West Germany’s so-called “Wirtschaftswunder” during the years following the currency reform in 1948. Others fear that the enormous structural distortions of East Germany’s industry, the rotten infrastructure, a labor force not used to working efficiently and a largely incompetent or uncooperative local administration will assign to this part of Germany the role of a depressed region for a long time to come, if not permanently. They point to other backward areas in Europe, such as northern England or southern Italy, which despite considerable financial transfers have not managed to catch up with the rest of the respective economy. The Italian government, for instance, has invested into its “Mezzogiorno” an estimated 100 bill. dollars between 1950 and 1984 and has scheduled for the period 1985 to 1993 another 115 bill. dollars. Nevertheless, economic growth rates of southern Italy are below the average of the country, per capita income is only half as high as in northern Italy, unemployment is four times as high and outmigration of qualified labor continues (Bender, 1990).
KeywordsMonetary Policy Labor Force Participation Rate German Democratic Republic Currency Union German Economy
Unable to display preview. Download preview PDF.
- BENDER, KLAUS W. (1990), Private sollen beim Aufbau des italienischen “mezzogiorno” helfen, Frankfurter Allgemeine Zeitung, October 31, 1990, p. 19.Google Scholar
- DIW (1990a), Deutsches Institut für Wirtschaftsforschung, Wochenbericht 43–44, Berlin: Duncker & Humblodt.Google Scholar
- DIW (1990b), Deutsches Institut für Wirtschaftsforschung, Wochenbericht 17, Berlin: Duncker & Humblodt.Google Scholar
- DIW (1990c), Deutsches Institut für Wirtschaftsforschung, Wochenbericht 33, Berlin: Duncker & Humblodt.Google Scholar
- HOFFMANN, LUTZ (1990), Wider die ökonomische Vernunft: Frankfurter Allgemeine Zeitung, February 10, 1990.Google Scholar
- IAW (1990), Institut für angewandte Wirtschaftsforschung, Die ostdeutsche Wirtschaft 1990/1991 — Trends und Perspektiven, Berlin, October 22, 1990.Google Scholar
- IFO (1990), Ifo-Institut für Wirtschaftsforschung, Ifo-Schnelldienst 26–27, München.Google Scholar
- STATISTISCHES BUNDESAMT (1989), Fachserie 18, Reihe 1.2, Wiesbaden.Google Scholar
- KARL-BRAEUER-INSTITUT DES BUNDES DER STEUERZAHLER (1990) Zur Finanzierung von DDR-Hilfen, Heft 70, Wiesbaden.Google Scholar
- LIPSCHITZ, LESLIE ET AL. (1989) The Federal Republic of Germany: Adjustment in a Surplus Country, IMF Occasional Paper No. 64, Washington, D.C., January.Google Scholar
- LIPSKY, JOHN AND THOMAS MAYER (1990) Solving Germany’s Fiscal Riddle, Salomon Brothers Inc., New York, November 2.Google Scholar