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Ten years of German unification - a commentary on the situation in east Germany

Author

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  • Hans-Werner Sinn

Abstract

German unification must be assessed as an economic failure. Despite substantial transfers, economic growth in the new Länder remains far behind that of west Germany. The catching-up process in east Germany has come to a temporary standstill with an economic productivity that is only 60% of that in west Germany, and the east Germans still only produce two thirds of what they consume. The root of the problem is in the law for regional promotion, the Dutch disease and the Mezzogiorno problem. In this situation fundamental reforms are needed. Participatory social welfare, a rejection of comprehensive wage settlements, company stock options for east German employees coupled with moderate wages, a reduction of social transfers to east Germany, and an increase in infrastructure investment could be part of a promising reform package.

Suggested Citation

  • Hans-Werner Sinn, 2000. "Ten years of German unification - a commentary on the situation in east Germany," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 53(26), pages 10-22, November.
    • Handle: RePEc:ces:ifosdt:v:53:y:2000:i:26:p:10-22
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    Citations

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    Cited by:

    1. Smolny Werner, 2003. "Produktivitätsanpassung in Ostdeutschland. Bestandsaufnahme und Ansatzpunkte einer Erklärung," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 223(2), pages 239-254, April.
    2. Michael Hüther, 2009. "The greater staying power of structural change: normalising expectations," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 62(18), pages 26-30, September.
    3. Wolfgang Gerstenberger & Beate Henschel & Herbert Hofmann & Carsten Pohl & Heinz Schmalholz & Carola Boede & Michaela Fuchs & Martin Werding, 2004. "Auswirkungen der EU-Osterweiterung auf Wirtschaft und Arbeitsmarkt in Sachsen," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 35.
    4. Kitterer, Wolfgang, 2002. "Die Ausgestaltung der Mittelzuweisungen im Solidarpakt II," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 02-1, University of Cologne, FiFo Institute for Public Economics.
    5. Erich Langmantel, 2004. "Investments: Catching-up process in east Germany has stopped for the time being," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(07), pages 37-40, April.
    6. Erich Langmantel, 2003. "Weakening investment dynamics in eastern Germany," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 56(06), pages 37-40, March.
    7. Stefan Arent & Alexander Eck & Oskar Krohmer & Robert Lehmann & Wolfgang Nagl & Joachim Ragnitz & Marcel Thum, 2011. "Wirtschaftliche Entwicklung Sachsens im Ländervergleich: Bestandsaufnahme und Perspektiven: Gutachten im Auftrag der Sächsischen Staatskanzlei," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 59.
    8. Michael Kloß & Robert Lehmann & Joachim Ragnitz & Gerhard Untiedt, 2012. "Declining transfer payments on the economic performance in Eastern Germany," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 63.
    9. Albert Müller, 2001. "Improved production opportunities and unchanged sales problems - time is running out for east Germany," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(03), pages 30-40, March.
    10. Albert Müller, 2002. "A prerequisite for a lasting upswing in east Germany: more equipment and plant investment," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 55(05), pages 27-30, March.
    11. Horst Feldmann, 2002. "Labour Market Policies in Transition: Lessons from East Germany," Post-Communist Economies, Taylor & Francis Journals, vol. 14(1), pages 47-84.
    12. Horst Feldmann, 2001. "Transformation in Ostdeutschland: Hat die Arbeitsmarktpolitik den Betroffenen geholfen?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 2(3), pages 259-278, August.

    More about this item

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • P59 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Other

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