Development of Eastern Germany

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Construction East is the common name for all economic policy measures that are intended to adapt the economic living conditions in the new federal states to the west of the Federal Republic of Germany .

It should be considered completed when living conditions in East Germany have risen to the level in the West. After a rapid catching-up process in the 1990s, rapprochement has largely come to a standstill since around 2000 and the New Länder have achieved between 70 and 80% of the western level for the main economic indicators (such as wages, gross domestic product, etc.). In addition, since 2000 there have been very dispersed regional developments between growth regions such as Leipzig or the Berlin area and large parts of the rural area , which are confronted with increasing shrinkage processes in various fields. On the other hand, the rebuilding east is considered largely successful in the areas that are directly subject to state control, such as transport infrastructure , urban development , environmental protection (removal of contaminated sites, post-mining remediation, water protection, etc.) or science and research.

Period

The concept of Aufbau Ost developed in the course of reunification , when it became clear in 1989 that the economy of the new federal states was in need of rehabilitation. Although economic research institutes were of the opinion that an abrupt economic union would hamper the remaining businesses, the monetary, economic and social union was passed in 1990 . The East German living conditions and opportunities were to be quickly brought into line with West German conditions after reunification. The industrial production of goods decreased by 70% by the beginning of 1991. The measures of the Aufbau Ost were intended to stimulate the East German economy in order to prevent an impending massive emigration to West Germany. The implementation should be coordinated by the state governments of the new federal states; They received funds from the federal government and the western federal states from the German Unity Fund and from the two solidarity pacts to build a self-sustaining economy. The construction east should be completed with the end of the Solidarpakt II 2019.

Unit-related costs

The initial ideas about the costs of German unity quickly proved to be outdated . As a new source of funding, a solidarity surcharge - initially limited - was levied on income tax. In addition, the mineral oil tax was increased on July 1, 1991 by 22 pfennigs (a good 11 euro cents) per liter of petrol; Due to the additional VAT , the actual increase was around 25 pfennigs (just under 13 euro cents).

For the unit-related costs , the estimates are between 250 billion East-specific transfer payments (statement by the former Federal Minister responsible for the development of the East, Manfred Stolpe ) up to 1.2 billion euros (statement by contemporary historian Klaus Schroeder ). The Bonn Republic had already paid the GDR 1.5 billion DM annually for the maintenance of transit routes to Berlin, granted a billion-dollar loan that had never been paid in 1983 and raised funds for the ransom of political prisoners . In retrospect, a secret message emerged to Egon Krenz that the existence of the GDR had been dependent on these payments since the 1970s.

The different sources and payment methods (tax revenue, capital and other income from ownership of the federal government, transfer payments from the state financial equalization system , etc.) as well as the economic effects for the federal government and the federal states due to demographic and economic developments (especially due to migration to the west after the opening of the border) do not allow a precise indication of the total expenditure to.

The information about the sums spent on reconstruction fluctuates, because it is disputed which items can be directly attributed to reunification. Only the 82 billion marks from the German Unity Fund can be clearly assigned. The cost of the currency, economic and social union, which turned 198 billion Marks in the GDR into 120 billion German Marks, cannot be calculated precisely because of the various conversion rates.

Economic problems and possible causes

Economic development

The extensive collapse of East German industry and the ongoing structural problems in this area are among the downsides of German unification. In the industrial sector of East Germany, compared to 1988, about 83% of the jobs were lost. This means that the economic development of Eastern Germany also fell short of expectations in comparison with other transition economies (such as the Czech Republic, Poland or Hungary). The outdated production facilities of the East German companies, which lacked investment funds for technical modernization, and the unproductive, labor-intensive manufacturing in GDR times proved to be problems that became clearly visible in the German unification process.

The breakup of the Eastern Bloc and its Comecon economic organization as a whole posed a major problem during the conversion phase. The most important trading partner for the GDR economy until 1989 was the USSR. However, after the introduction of the Deutsche Mark in the GDR and especially after the collapse of the Soviet Union, this market disappeared completely because the former Comecon members no longer handled international trade with transfer rubles , but with foreign exchange that could be earned on the world market.

The competitiveness of the East German economy was also weakened by the politically motivated change course required by the East German population within the framework of the monetary union. In addition to an age-dependent base amount (between 2000 and 6000 GDR marks), which was exchanged 1: 1, the conversion rate was 1: 2 (i.e. 1  German mark to 2  GDR marks ). Due to the lack of convertibility of the GDR mark, there was no real exchange rate, but the exchange rates on the gray market fluctuated in the range 1: 6 to 1: 9 (at the banks in the GDR). The companies' debts were converted at 1: 2, although in terms of value a rate of 1: 4 could have been justified. He ensured that the cost of labor in East Germany exploded before the state was unified to such an extent that the competitiveness of most companies was seriously impaired.

The operational sites of the combines , to which almost all of the factories belonged, were often severely disrupted; at the same time, buildings and production facilities were worn out and no longer up to date. The structural change caused the unbundling of the large combines, the conversion into medium-sized and small businesses and the closure of many production facilities. The Treuhandanstalt was responsible for the privatization . Although the companies from the Federal Republic mostly had no interest in taking over or continuing to operate, almost all of the larger and medium-sized companies in the old GDR came under West German ownership. For many East German citizens, the empty economic promises were "a serious disappointment - and for some a humiliation".

The job cuts were enormous. The official unemployment rate does not reflect the reality of that time, since workers in “ short-time work zero hours”, the “waiting loop”, in job creation measures and in early retirement were not included in the statistics as unemployed. For example, the inclusion of agriculture in the agricultural policy of the European Union led to the closure of agricultural land. In many villages and towns, industrial wastelands were created when businesses were closed. This was called deindustrialization , although this term does not in principle exclude further development, tertiarization towards a service society . In some regions, entire branches of the economy collapsed because they could not keep up with the competition under market conditions - too much labor and the simultaneous production of products that were manufactured at uncompetitive prices and with outdated machines. This led u. a. the long East German tradition of ore mining ended in 1991.

Afterwards, there were hardly any employment alternatives for people who had become unemployed, as new investments did not create enough new jobs. The collapse of the old GDR economy associated with these reasons led to a migration process of historic proportions. Between 1990 and 1991 alone, two million East Germans turned their backs on their homeland and emigrated to the old federal states in search of work. On the other hand, in 1991 the authorities also issued so-called 19-a-transport permits for long-distance freight transport in order to better cover the continuing demand for goods in eastern Germany, which was often based on a pent-up demand for equipping eastern German households.

According to Helmut Schmidt, the illusion that the economic landscape would blossom within four years and that the Germans in the East would by then achieve the same wages and salaries as the Germans in the West was overtaken by reality in 1992 and exposed as untenable.

Adjustment of the wage level

All in all, the rebuilding of the East was quite successful, if one does not take into account the exaggerated initial expectations that were fueled in the early 1990s. The nominal gross domestic product per inhabitant (East Germany including Berlin) rose from a good 42% (1991) to 65% within seven years. Comparable figures are available for infrastructure equipment. The adjustment of the income situation has continued. While the average gross wages and salaries per month only reached 48% of West Germans in 1991, in 1998 it was 78%. Taking into account the tax payments made and transfer payments received, the East German households already reached 87% of the western level in 1998. However, even 20 years after reunification, the income differences had not diminished. According to a study by the Hans Böckler Foundation , the wage differences in 2011 were still 17 percent on average.

Economic reasons: wage development vs. productivity

Some economists cite the wage development in East German industry as the reason for the sustained slowdown in the economic upturn. As a result of the so-called proxy negotiations, in which West German trade unions and employers' associations negotiated wages in the east, wages there rose faster than productivity. According to the Halle Institute for Economic Research, this was only 54% for all companies in East Germany compared to West Germany (calculated from the gross value added per employed person). This led to a deterioration in the competitiveness of the still existing industry, a large part of which perished, and in the long term to the reluctance of West German and foreign companies to invest. But the quick conversion to the market economy also overwhelmed the companies.

Industrial sociological reasons: economic elites and their corporate policies

In addition to explanations at the system level, which underline the wrong course set by economic unification and in particular blame the monetary union under its consumer-friendly or business-damaging signs (exchange rate), explanations at the actor level dominate. There, technical deficits, mentality and traditional attachment of East German managers and workforces were suspected as obstacles to industrial consolidation.

From an industrial sociological perspective, there were specific modernization constellations at the system level at the beginning of the “Construction East”, which marked the path of further development. The direction of the industrial development path was largely shaped by the abrupt expansion of the market economy, the orientation towards the model of Rhenish capitalism and by technocratic models of development. In the course of social change, cultural traditions were unified and partially cut off. This was mainly due to the comparatively radical exchange of the previous nomenclature , which was replaced by West German or foreign managers, but also by new East German elites.

At the intermediate level of corporate politics, technical interpretations of economic problems dominated after the unification. The largely scientific or technical educational qualifications of East German managers established a specific “engineering culture” at the level of actors, which gave technological problem solving priority over organizational or market-economic coping strategies. The new economic elite operated on the premise that they already understood how the new economic system worked; her primary concern was to catch up with the West in terms of technology.

In the event of failure, so the logic of this conceptual model, one was just not technically good enough. In terms of industrial policy, such a view was reinforced by regional subsidies for innovative product developments. Complicated strategic considerations, in particular a possible repositioning of the company in global supply chains, were blocked by the orientation towards the West German production model:

“In direct dependence on the West German economy, the new entry with advanced, but still nameless high-tech products could not succeed. Market entry often failed due to the obvious disregard of an acculturation problem , to dealing with the opacity of the national and international markets. Their technical interpretation was not rewarded in a market economy. Only on this basis can it be explained why the sudden 'uprooting' of East German producers led to development obstacles that allowed the structural crisis of the East German economy to persist. The maintained fiction of a possible approximation by imitation of the West also contributed to this. "

- Markus Pohlmann : The industrial crisis in East Germany. On the role of economic elites and their corporate policies , p. 423

Transfer payments as a way out of the crisis?

Typical condition of the cities in the GDR at the time of reunification; here Wittenberg (1991)

The transfer payments and the costs for the construction of the East should now be borne by the solidarity surcharge and the solidarity pact . The solidarity surcharge ("Soli") is levied on income and corporation tax, is a pure federal tax and has been 5.5% since 1998. But since it is not earmarked, it was also used for other federal expenditure. The Solidarpakt, however, as Solidarpakt I (1995 to 2004), was an extension of the state financial equalization , in which East German states also received financial benefits from the German Unity Fund ; the expansion Solidarpakt II (2004 to 2019) also supports structurally weak regions in the old federal states in the second basket .

The solidarity surcharge to be paid by (all) German taxpayers (above a certain level of income tax payment) also caused strife between East and West Germans. As the Emnid Institute found in September 2004, every second West German perceived the annual payments for the East as too high, sometimes not knowing that the “Soli” must also be paid in East Germany.

Uwe Müller called the development in 2006 a supergame German unity (book title), but was accused of providing one-sided evidence, the Federal Agency for Civic Education writes more balanced:

“The level of integration achieved so far is judged very controversially, abroad tends to be more positive than in D. With regard to the future, the spectrum ranges from very positive assessments to the fear that the strong internal German east-west divide will increase despite or even because of the substantial transfers, and in East Germany a new Mezzogiorno could develop. "

- BPB.de on the inner-German economic union

If nothing changes, said former Federal Chancellor Helmut Schmidt in 2005, “we will get a moderate mezzogiorno in the former GDR without the Mafia”.

Uwe Müller gave the following reasons for the growing crisis in the new federal states:

  • As a result of the economic and monetary union, the East German companies were unprepared for being plunged into all-German and global competition.
  • With the exception of the federal structures such as the railroad and motorway network, the funds would be allocated directly to the state governments; even in Solidar Pact II there is no possibility for the federal government or other states to check the individual uses. A large part of the sum is not going into expansion, but into luxury and consumption (e.g. amusement parks in structurally weak areas instead of structural expansion).
  • The politicians grant the trade unions (in the leadership occupied by the West) western wages in order to avoid a conflict with them, although the eastern wages would be the only locational advantage of the East German economy in its poor sales and structural weakness.

When the funds are wasted, it does not take into account which costs are not worthwhile expenses such as construction. B. of five airports that are still underutilized in the poorly populated Mecklenburg. Most of it even seeped into the budget holes: in just 15 years the new ones reached the indebtedness of the sixty-year-old federal states, and that with a much lower productivity. By far the worst was at times around the budget of the state of Berlin, which tried in 2006 with a constitutional complaint to force the federal government to reorganize the state budget. The lawsuit was denied because not all remedial measures had been taken. The constitutional judges also determined that the federal government only has to rehabilitate a state if its state of emergency threatens the entire Federal Republic, above all because states must have made serious wrong decisions over several years in order to achieve an emergency. Bremen and the Saarland also met this judgment.

Follow-up developments and annual reports on the status of German unity

From 1995 onwards, the process known as "Aufbau Ost" was under different conditions. The solidarity pact , called Solidarpact I since 2004, followed the renaming of the Treuhandanstalt and the end of the German Unity Fund (volume: 82 billion D-Mark) .

Annual reports were published on the development.

In September 2008, the then Federal Government Commissioner for the new federal states , Federal Transport Minister Wolfgang Tiefensee , published the annual report with the particularly positive decline in unemployment from 18 to 12 percent. Economic growth is still above the national average. This increases the overall economic performance to 70% of the western level. In spite of all this, a feeling of second class prevails, which can be attributed to a solidifying number of long-term unemployed, the lower east wages and pension problems. The population shrinkage is worrying and not addressed enough, especially young people and skilled workers - and thus in some cases up to 25% of the population - are leaving.

In 2015, according to the figures from the German Federal Pension Insurance Association, the "old age pensions" averaged 787 euros in the west and 964 euros in the east, with women in the east receiving 846 euros and women from the west receiving 580 euros. For men, the figures were 1124 euros in the east and 1040 euros in the west.

Economic research institute report 2011

In February 2012 the NRW Prime Minister Hannelore Kraft criticized the system. It calls on the federal government to publish a study on the construction of the East that has been under lock and key for a year immediately and to quickly draw conclusions. "NRW is still ready to show solidarity, but if the report comes to the conclusion that all structurally weak regions in Germany must now be treated in the same way, there must be consequences." At the same time, she called for additional help for structurally weak regions in the west from the federal funding programs: "Now it is West Germany's turn". The study was commissioned by the Federal Ministry of the Interior ; The contractors were six economic research institutes under the leadership of the Halle Institute for Economic Research . They came to the conclusion that the harmonization process in the new federal states had "long since come to a standstill" despite the steady flow of aid.

The German Institute for Economic Research and the Ifo Institute spoke out in a separate vote against subsidizing the East. “DIW and Ifo are not of the opinion that the state should intervene in the decision-making of companies with subsidies. With such a subsidy there is also the risk that functions will only be relocated from other locations. "

East German consumer brands and trade products

There was hardly any demand for the East German consumer brands and retail products after the western market providers moved into the GDR. Counterexamples can be found especially with food, whereby the East German food industry has meanwhile established itself as a powerful branch of the economy. An example of this is Rotkäppchensekt , which replaced the West German Mumm Sekt by taking over.

literature

Individual evidence

  1. ↑ http://www.bpb.de/nachhaben/lexika/lexikon-der-wirtschaft/18713/aufbau-ost
  2. ↑ Ulrich Heilemann and Hermann Rappen, Aufbau Ost, in: Lexikon Soziale Marktwirtschaft (Freiburg: UTB, 2002), p. 107.
  3. ↑ FAZ article on total transfer performance : All federal governments have tried to disguise the costs of the association, probably to prevent a debate about envy. Since the association is financed from various confusing sources, there are only estimates of the amount of the transfers. According to calculations by the IWH ( Institute for Economic Research Halle ), gross transfers from 1991 to 2003 were around 1.2 trillion euros, and net transfers around 900 billion euros.
  4. ↑ "The KoKo [commercial coordination] is said to have earned up to 25 billion marks", from: Encyclopedia of the GDR.
  5. ^ A b Uwe Müller: Supergau German Unity. Hamburg 2006, ISBN 3-499-62153-3 , chap. 1
  6. ↑ a b Markus Pohlmann (2005): The industrial crisis in East Germany. On the role of economic elites and their corporate policies , in: Germany Archive 38 (3), p. 417.
  7. ↑ Weekly report  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice. of the DIW from June 1, 2007.@1@ 2Template: Dead Link / www.diw.de  
  8. ↑ Müller, p. 48.
  9. ↑ Quotation from Helmut Schmidt : In search of a public morality. Germany before the new century. Deutsche Verlags-Anstalt, Stuttgart 1998, p. 31 ff.
  10. ↑ Helmut Schmidt: In search of a public morality. Germany before the new century. Deutsche Verlags-Anstalt, Stuttgart 1998, p. 35.
  11. ↑ Federal Ministry of Economics and Technology (ed.), Balance sheet of the federal economic development in East Germany up to the end of 1998 (Bonn: BMWT, 1999).
  12. ↑ Enormous wage gap between West and East, in: Focus Online on July 12, 2011, (online at: focus.de )
  13. ↑ Markus Pohlmann (2005): The industrial crisis in East Germany. On the role of economic elites and their corporate policies, in: Germany Archive 38 (3), p. 417ff.
  14. ↑ Markus Pohlmann (2005): The industrial crisis in East Germany. On the role of economic elites and their corporate policies, in: Germany Archive 38 (3), p. 421f.
  15. ↑ Markus Pohlmann (2005): The industrial crisis in East Germany. On the role of economic elites and their corporate policies , in: Germany Archive 38 (3), p. 422f.
  16. ↑ Tagesschau.de on the solos, 2007 ( Memento from September 13, 2008 in the Internet Archive )
  17. ^ Reviews of Müller's Supergau
  18. ↑ BPB.de on the inner-German economic union ( Memento from March 16, 2010 in the Internet Archive )
  19. ↑ Helmut Schmidt: On the way to German unity. Balance sheet and outlook. Reinbek 2005.
  20. ^ Berlin on its budgetary emergency, with jur. Assessment evaluations ( Memento from May 27, 2010 in the Internet Archive )
  21. ↑ Bremen and Saarland also complain ( Memento of October 13, 2007 in the Internet Archive )
  22. ↑ Annual reports on the status of German unity
  23. ↑ Tagesschau.de on the 2008 annual report ( Memento from September 24, 2008 in the Internet Archive )
  24. ↑ "Average pension in the west at 1375 euros" in the Frankfurter Rundschau from September 20, 2017
  25. ↑ handelsblatt.com February 29, 2012: Kraft calls for a construction West
  26. ↑ handelsblatt.com: DIW and Ifo are against subsidies from the East