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Germany: Five
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
pre-unification
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.
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