Twenty years after the
fall of the Berlin Wall, progress towards economic integration between
eastern and western Germany is clearly visible, yet the eastern region
almost certainly will remain dependent on subsidies funded by western
Germany until well into the next century. The staggering $390 billion
in western German assistance that the eastern states have received since
1990 - 40 times the amount in real terms of US Marshall Fund aid sent
to West Germany after World War II - is just beginning to have an impact
on the eastern German standard of living, which plummeted after unification.
Assistance to the east continues to run at roughly $100 billion annually.
Although the growth rate in the east was much greater than in the west
in 1993-94, eastern GDP per capita nonetheless remains well below preunification
levels; it will take 10-15 years for the eastern states to match western
Germany's living standards. The economic recovery in the east is led
by the construction industries which account for one-third of industrial
output, with growth increasingly supported by the service sectors and
light manufacturing industries. Eastern Germany's economy is changing
from one anchored on manufacturing to a more service-oriented economy.
Western Germany, with three times the per capita output of the eastern
states, has an advanced market economy and is a world leader in exports.
The strong recovery in 1994 from recession began in the export sector
and spread to the investment and consumption sectors in response to
falling interest rates. Western Germany has a highly urbanized and skilled
population that enjoys excellent living standards, abundant leisure
time, and comprehensive social welfare benefits. It is relatively poor
in natural resources, coal being the most important mineral. Western
Germany's world-class companies manufacture technologically advanced
goods. The region's economy is mature: services and manufacturing account
for the dominant share of economic activities, and raw materials and
semi-manufactured goods constitute a large portion of imports.
Inflation rate (consumer
prices):
western: 3% (1994)
eastern: 3.2% (1994 est.)
Unemployment
rate:
western: 8.2% (December
1994)
eastern: 13.5% (December
1994)
Budget:
revenues $690 billion; expenditures
$780 billion, including capital expenditures of $96.5 billion (1994)
Exports:
$437.0 billion (f.o.b.,
1994)
commodities:
manufactures 89.3% (including
machines and machine tools, chemicals, motor vehicles, iron and steel
products), agricultural products 5.5%, raw materials 2.7%, fuels 1.3%
(1993)
manufactures 89.3% (including
machines and machine tools, chemicals, motor vehicles, iron and steel
products), agricultural products 5.5%, raw materials 2.7%, fuels 1.3%
(1993)
partners:
EC 46.4 ( France 11.3%, Netherlands 8.4%, Italy 8.1%, UK 6.0%, Belgium and Luxembourg 5.7%), EFTA 14.3%, US 7.3%, Eastern Europe 5.2%, OPEC 2.6% (1993)
among world's largest and
technologically advanced producers of iron, steel, coal, cement, chemicals,
machinery, vehicles, machine tools, electronics; food and beverages
eastern:
metal fabrication, chemicals,
brown coal, shipbuilding, machine building, food and beverages, textiles,
petroleum refining
Agriculture:
western:
accounts for about 1% of
GDP (including fishing and forestry); diversified crop and livestock
farming; principal crops and livestock include potatoes, wheat, barley,
sugar beets, fruit, cabbage, cattle, pigs, poultry; net importer of
food eastern:
accounts for about 10% of
GDP (including fishing and forestry); principal crops - wheat, rye,
barley, potatoes, sugar beets, fruit; livestock products include pork,
beef, chicken, milk, hides and skins; net importer of food
Illicit
drugs:
source of precursor chemicals
for South American cocaine processors; transshipment point for Southwest
Asian heroin and Latin American cocaine for West European markets
Economic
aid:
western:
donor - ODA and OOF commitments
(1970-89), $75.5 billion
eastern:
donor - $4.0 billion extended
bilaterally to non-Communist less developed countries (1956-89)
Overview: