The Economics Of German Unification

This timely examination of the major issues in German unification emphasises its impact on different sectors of the economy and their likely consequences.

German unification has proven to be a complex, multidimensional process rather than a single political event. Four years after political unification, Germany continues to confront formidable economic, social, and cultural challenges in the unification process. This volume examines some of economic, social and legal aspects of the unification process four years after political unification was achieved.

German unification is changing central Europe, the EC and international economic and political relations. Prosperous West Germany with its "social market economy" has absorbed the socialist GDR which is facing a complex systemic tranformation process. This volume analyzes the causes, developments, and processes that are associated with German unification. The merger of the two Germanies provides a unique laboratory like example of institutional and economic changes against which established economic theoreis and economic policy concepts can be tested. German unification raises, of course, many new questions for Grmany itself, Europe, and the whole international community. Will the enlarged Germany become a new economic giant in Europe and can the FRG maintain stability and prosperity? What macroeconomic and structural problems are faced by the new Germany and what are the effects for trade, investment, and growth in Germany`s partner countries? Will East Germany catch up with the West and can this process serve as a model forEastern Europe? What are the views of Poland and the USSR, and what implications arise for Western Europe and the United States? Finally, how isthe triangular relationship between the U.S., the EC, and Japan affected, and how does this affect the United States` ability to organize economic cooperation with Japan, Germany, and other leading economies?

This paper discusses comparison of economic and social indicators in the year 1988 between Federal Republic of Germany (FRG) and German Democratic Republic (GDR). The budgetary costs of unification will be substantially larger than initially envisaged. Moreover, if one adds to the budget the increases in government debt related to equalization paper, a portion of the old enterprise debt on the books of the banks. The Trust Fund has been assigned a task or enormous scope and complexity: the privatization, restructuring, and in some cases, liquidation of 8000 enterprises with 4 million employees. Even taking care of the short-run financial problems of these enterprises has proved daunting; the more fundamental task will be near impossible to achieve with any rapidity. It is clearly essential to the success of economic integration that capital allow east rather than labor flowing west and that income growth and new opportunities arc enough to meet reasonable aspirations on the pan of the residents of East Germany.

The unification of Germany is a policy issue of worldwide interest and holds key lessons for the remaining post-socialist economies. This text presents a clearly argued analytical account of the reunification process and the policy alternatives.

Examines such issues as privatization, monetary reform, and unemployment in reunified Germany. Contributors from economics and politics discuss the complex processes of the unification and what can be learned from it about economies and societies that undergo profound transformations. They suggest that Europe as a whole is about to encounter such change of like magnitude. Annotation copyrighted by Book News, Inc., Portland, OR

First published in 1993. Routledge is an imprint of Taylor & Francis, an informa company.