German Unification and the Prospects for Catch-up Development
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German unification commonly raised expectations of a relatively ‘easier’ process of transformation and catch-up in the new Bundesländer in comparison to other PSEs: with monetary stability being guaranteed by the Bundesbank, coherent institutions set up and functioning right from the start, unrestricted access to Western markets and, not least, immense financial aid from West Germany and the EU, the conditions for a rapid convergence to Western levels of economic welfare appeared to be very promising indeed. Furthermore, within the former CMEA, the GDR used to rank among the most advanced economies.
KeywordsCreative Destruction Shock Therapy Wage Cost Wage Policy Wage Subsidy
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