Download The Benefits of German Unification

A Review after 20 Years
Prof. Dr. Ralph M. Wrobel
Faculty of Economics
Westsaxon University of Applied Sciences
PO Box 20 10 37, 08012 Zwickau


German Unification: a Disappointing Success?
Benefits of Unification
◦ Political Benefits
 Recovery of Sovereignty
 International Political and Economic Importance
 One Nation in One State
◦ Economic and Social Benefits
Simplified Institutional Choice in Transformation
Immediate EU Membership
Development of GDP per Capita
Improvement of Infrastructure and Reconstruction of
Cultural Heritage
 Selected Social Indicators





Summary
GDP per Capita of East Germany
“Neue Bundesländer” in Relation to “Alte Bundesländer” in %

„blühende Landschaften“
(Federal Chancellor Helmut Kohl 1990)


“same living conditions in
East and West Germany”
estimated €1.3 trillion ($1.6 trillion)
flow from West Germany over the last
20 years
Purchasing Power
Germany 2007
per capita economic output only
at 71% of western
level
 relative small
growth rates
 gradual but slow
catch-up process

Unemployment
Germany 2009



high unemployment rates
population decline
by 2 million people
proportion of
household income
derived from
welfare payments
20 percent higher
than in the west
Castle in Zwickau, Saxony
Treaty on the Final Settlement With Respect to
Germany (so called Two-plus-four-treaty) 1990
◦ Four Powers renounced all
rights they formerly held
in Germany
◦ All Soviet troops were to
Germany by end of 1994
◦ Germany's confirmation
of border with Poland
leave
FRG
GDR
e.g. Largest and Economically Strongest Country in the European Union

worth of itself that all
Germans can live in one
country together?

unification in 1990
inspired initial euphoria

Nowadays:
◦ “Ossis” (East Germans) vs.
“Wessis” (West Germans)
◦ “Ostalgie” (Ostalgia)
Goethe and Schiller Monument, Weimar

immediate introduction of functioning…
◦ currency (Deutschmark)
◦ legal and administrative
system
◦ social security system

stable expectations
for investors and consumers
immediate access
to European
markets 1990
 immediate access
to European
structural funds:
17.9 billion Euro

(1990 – 2006)
Germany, FRG
East Ger.
United Germany
EU 15
Slovenia
Slovakia
Romania
Poland
Lithuania
Latvia
Hungary
Estonia
Czech Rep.
Bulgaria
East Germany
17 infrastructure projects:
Highways (yellow)
Rail Network (black)
Costs ~ 38 billion Euro
Old Town Erfurt
Frauenkirche
Dresden
Real Annual Working Time in Hours
East Germany
West Germany
Women West
Women East
Men West
Men East

high financial costs of unification
equalization of living conditions not attained

United Germany

◦ sovereign nation since 1990
◦ large and economically powerful nation in Europe

East Germany
◦ relative successful transformation “state”
◦ high welfare gains for East German population
◦ infrastructure and cultural heritage reconstructed