Economic History of Germany - German Reunification and Its Aftermath

German Reunification and Its Aftermath

Germany invested over $2 trillion marks in the rehabilitation of the former East Germany helping it to transition to a market economy, and cleaning up the environmental degradation. By 2011 the results were mixed, with continued to slow economic development in the East, in sharp contrast to the rapid economic growth in both area and southern Germany. Unemployment was much higher in the East, often over 15%. Economists Snower and Merkl (2006) suggests that the malaise was prolonged by all the social and economic help from the German government, pointing especially to bargaining by proxy, high unemployment benefits and welfare entitlements, and generous job security provisions.

The old industrial centers of the Rhineland and North Germany lagged as well, as the coal and steel industries faded in importance. The economic policies were heavily oriented toward the world market, and the export sector continued very strong.