Economic Convergence and Divergence in Europe Growth and Regional Development in an Enlarged European Union
Growth and Regional Development in an Enlarged European Union
Edited by Gertrude Tumpel-Gugerell and Peter Mooslechner
Chapter 6: German economic reunification: a special case with general lessons?
6. German economic reuniﬁcation: a special case with general lessons? Karl-Heinz Paqué 6.1. FUNDAMENTAL FACTS When the two German economies were reunited in 1990, they started roughly on a par with the comparable neighbour countries within their respective economic systems. Labour productivity and per capita income were: ● ● only slightly higher in western Germany than in France; probably only slightly higher in eastern Germany than in the territory of what is today the Czech Republic. Unfortunately, a direct comparison of western and eastern national accounts before uniﬁcation is very diﬃcult because of the lack of market values in command economies. Nevertheless, there is no doubt whatsoever that the per capita and labour productivity gap between the two parts of the country was vast by any standard. In 1991, the ﬁrst year for which reasonable national accounts have been calculated for eastern Germany on a market value basis, eastern labour productivity (GDP per worker) stood at roughly one-third of the western level – after large-scale lay-oﬀs and a ﬁrst wave of heavy industrial restructuring had already taken place. From this level, an extremely fast process of convergence of eastern towards western productivity levels set in. By 1996, the east reached roughly two-thirds of the western productivity level. Given the much higher unemployment rate, which is about twice as high in the east as in the west, that productivity gap translated into an eastern per capita income of 60 per cent of the west. Since that time, not much has...
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