The Political Economy of German Unification

The Political Economy of German Unification

The Political Economy of German Unification

The Political Economy of German Unification

Synopsis

Although German unification has had a profound impact on European integration and development, very few studies of the East German economy exist. Specialists in economics and politics examine issues such as privatisation and monetary reform.

Excerpt

Thomas Lange and J.R. Shackleton

Germany in the last years of the twentieth century is the most important economic power in Europe. It has the largest population, at just over 80 million (of which around 35 million are economically active). Its gross domestic product accounts for nearly a quarter of European Union GDP. On the world stage it is the third leading economic power behind the United States and Japan. Its living standard, as measured by GDP per head, is close to that of the United States, though it suffers far less crime and its citizens are much less likely to be in severe poverty. In the postwar period West Germany enjoyed virtually continuous economic growth at historically high rates, low unemployment and low inflation. East Germany, annexed by the Soviet bloc in the 1940s, developed very differently and was far less successful economically, but nevertheless seems to have been one of the best economic performers in COMECON (not, admittedly, a great achievement).

So we might expect that the newly reunited German people would be approaching the twenty-first century with pride and confidence. This does not, however, seem to be the case. The economic and social costs of reunification, together with uncertainties over the future development of the European Union and concerns . . .

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