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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