East Germany and West Germany

Many years have already passed after the time of West and East Germany reunification.

Many years have already passed after the time of West and East Germany reunification. In 1990 GDR and FRG united into a new European country, however, the significant differences are observed in many fields, particularly, in medicine and education. However, the main difference between West and East Germany is in their economies and GDR has a noticeable lagging comparatively what you can see from capstone project ideas.

To begin with, Germany as a single state existed nearly eighty years before its separation into East and West parts called FRG and GDR. In February 1945, after Germany surrendered, at the conference in Yalta the German territory was divided into four zones controlled by France, the United States, Britain, and the Soviet Union. Almost half of Berlin territory belonged to the Soviet Union as well. However, the Cold War between the USA and USSR lasted during that time and caused the division of Germany and Berlin into two separate parts. The Soviet Union regulated East Germany, and the Democratic West with the USA controlled the West part. In 1949 the three western zones became a separate state of the Federal Republic of Germany (FRG), and the Soviet-controlled East Germany became the German Democratic Republic (GDR).

In 1961, Berlin wall was build, and it divided the town and Germany into the East and West parts. This construction has existed till November 9, 1989. Moreover, the reunification of the East and West territories, particularly, GDR and FRG happened on October 3, 1990. The Germans became separated by the USA and USSR ideologically. Gradually, the Cold War has reached its altitude and the Soviet Union developed an “East German national identity” and thus controlled all East territory. With the 1955 “Hallstein Doctrine” the Federal Republic had threatened to sever diplomatic ties with any country other than the Soviet Union that recognized the “Soviet-occupied zone of Germany” as a sovereign state.

After the World War II devastation, the economy of West Germany got the name “economic miracle”. This period started in 1948 and a gradual combination of stability and growth caused the world respect and reverence of the West Germany economic system. Effective economic management caused the positive performance of the FRG economy. However, the temporary factors played an especially important role in stimulation of the economic growth during the post-war period.

One of the contributing factors to this was the high level of unemployment caused by the return home of many displaced persons and servicemen. Additionally, many refugees from East Germany, Poland and Czechoslovakia came to FRG and this movement continued till 1961. All these people could work at the remuneration rate and employers saved money for the next investments. Moreover, the essential currency reform was performed in French, British and American zones and the deutsche mark was introduced in June 1948. Additionally, from 1948 to 1952 the U.S.-financed Marshall Plan had a positive effect on the revival of postwar Europe.GNP (gross national product) of FRG was growing, and its growth included 8% per year from 1951 to 1961 and as a result, these facts caused the increase of the French, British and American exports.

In spite of the oil crisis in 1973, the FRG economy had an upward trend. Actually, when FRG and GDR reunited in 1990, the economy of West Germany included business expansion since the 1980s to 1992. Moreover, the German economy had one of the largest world economies and the best results in the world trade. Indeed, maintaining low inflation caused such positive effect.

On the contrary, the GDR economy had several other indicators. It was clearly not a performance comparable to that of West Germany; but it was a performance sustained under infinitely more difficult circumstances. Moreover, it had certain advantages in comparison with other East European economies. In contrast to other European countries of the Soviet-style management, GDR had rather developed capitalist economy before the Second World War and it contributed the faster reconstruction. Saved industrial infrastructure, scientific high level and inherited skills facilitated the quicker recovery, however, people living standard was lower than in West Germany.

The economy of GDR was command, and all decisions and questions were discussed and taken by the communist Socialist Unity Party (SED). SED’s inflexible system of planning caused deterioration of the economic situation. Trade unions and other groups should work for the achievements of the ruling party objectives. Moreover, economic decisions were driven by the personal relations, influence and power. The lack of technological innovation and a quality control, apathy, cynicism, and inertia of enterprise managers and workers worsened the GDR economy. In contrast to incentives of FRG management, quality and the amount of production did not have an impact on workers salary and it caused the employees’ lethargy and indifference. Additionally, distribution and supply were controlled by the state structures and local administrations. Hence, these facts reduced the economy level as well. Furthermore, the goods deficit was growing and a “gray market” flourished as a result.

On the contrary, the government of West Germany did not take the economy control completely. In 1982, the government had $25 billion worth of assets and they were oil companies, railroads, Volkswagen Company, Goldman and others. The West Germany economy developed in different directions and had a more mixed character. The private sector could use altered subsidies; technological innovation was supported by a unique Federal Ministry of Research and Technology; there was a systematic view at the five-year economic projection. However, a system of free enterprise stayed in place.

Additionally, West and East Germany felt difficulties due to the import of energy and other resources. For reduction of the market fluctuations dependence the West Germany government widely improved energy supply alternative sources. Moreover, FRG started to export many of German goods and it has brought many positive results. Note that both West and East economics had their separated ways and reached relatively satisfactory results. However, the main difference in the GDR and FRG economies was an approach to the citizens’ standard of living.

In 1978, the German Institute for Economic Research in West Berlin made the study stated the noticeable contrast existed during the purchasing power measurement of the Deutsche mark and GDR mark. The experiment showed that both marks purchased more than their related market baskets were used. However, the FRG basket was full of “luxury” goods as coffee, cars and fine crystal, and these goods were hardly affordable for the people of East Germany. Hence, falling of the Berlin wall in1989 caused the numerous movement from GDR to FRG and it was a heavy blow to the East German economy. Unfortunately, many immigrants were young people with marketable skills and this fact caused the problem aggravation. Finally, the economic unification, achieved by July 1, 1990, swept away all customs barriers and introduced the deutsche mark as the sole currency in Germany.

To summarize, the West and East economies are different even many years after their unification. The Soviet-style GDR economy lagged considerably from an economy of FRG and it still needs much time for achievement such level of development. The falling of Berlin wall has united the territory; however, it did not combine citizens’ standards of living.