Economic environment and starting conditions of East German companies in 1990

Abstract

A number of different studies on the transition process in East Germany has shown that in 1990, at the beginning of their adaptation processes, formerly state-owned industrial companies in East Germany faced a rather difficult situation. They lacked competitive products and financial resources, their operations were mostly inefficient, and they possessed a high surplus of employees – to name but a few of their problems.¹ These deficits can be attributed to two main causes, the heritage from socialist times and the pace at which the institutional transformation from a socialist towards a market economy was carried out in East Germany.²