Economic Historic Development of the German Democratic Republic
Originally, I wanted to introduce the economic history of Germany. Unfortunately, 1000 words are too less to give a revealing overview about this. I was born in the area of the former German Democrat Republic (GDR), which only existed from 1949 to 1990. The interest in this time of German history and my ethnical background led me to write this essay about the economic historical development of the GDR. To improve the understanding: The GDR developed out of the Soviet zone of occupation after World War II and remained until its end a part of the Soviet Union.
After World War II Germany was divided into the American, French, British and Soviet zone of occupation. From 1945 to 1949, a land reform took place in the Soviet zone of occupation, where owners of land were expropriated, most of the time without compensation. The same happened with big business and wholesale banks. The remaining private companies were transformed into State-owned enterprises and businesses with State Participation. From 1952 to 1960, almost the entire agricultural land went into nationally owned goods or agricultural production cooperatives.
Since June 23, 1948, the GDR implemented its own currency - The Deutsche Mark. In September 1950 the GDR joined the 1949-founded Council for mutual economic assistance. The Organization, led by the Soviet Union, was created to allow the economic independence of the Eastern European States. Towards the end of the 50s the first international economic plan was created.
Economic difficulties should be addressed with an increase of labour standards by 10 percent, but this and among other things resulted in the popular uprising of 17th June 1953. Until August 13, 1961, when the beginning of the construction of the Berlin Wall and the reinforcement of the border fortification on the inner German border began, many million East Germans fled to West Germany. In 1962, the retail chain Intershop was founded to generate "Western money". There people from the GDR could buy goods with Western money. The "new economic system of planning and management" was introduced in 1963 and existed until 1967. It implemented performance bonuses for workers and a greater flexibility of operations.
In June 1971 Erich Honecker promised, after he had replaced Ulbricht in the VIII Party Congress, improvements for the population, such as the increase of in consumer goods production or a housing program (called a unit of economic and social policy). These measures were only partly financed by the progress of the East German economy, so that East Germany increasingly indebted of the Federal Republic. Since the mid-1970s the export against foreign exchange strengthened, the minimum exchange for West German visitors increased and a transit fee for traffic between West Germany and West Berlin was implemented. The state planned economy concentrated at this time on less industrial areas, where modern machines were purchased, whereas in the other industries these machines were missing.
In the second half of the 1970s, the Soviet Union, as a result of the oil crisis, increased the price of oil for their Eastern European customers and lowered 1979/1980 quantity of crude oil delivered to the GDR from 19.3 million tons to 17.3 million tonnes. The GDR responded by exporting petrochemical products, mainly gasoline and diesel, preferably in the West and generated their own energy mainly out of brown coal and nuclear power. This so-called "fuel oil transfer" resulted in the increase of foreign exchange earnings and the reduction of debt in the West, but from the mid-80s, the price of oil fell again.
Specialization in the production led to the increased export of consumer and electronics goods, as well as ships or data processing machines and office equipment.
By the 1960s East Germany recruited temporarily and without intention of integration contract workers for jobs in the light industry and the consumer goods industry. In 1981, there were 24,000 contract workers, in 1989 approximately 94,000 with two-thirds of Vietnamese origin. The foreign trade of the GDR was about 70 percent with socialist countries, 25 percent with Western industrial countries and about 5 per cent with developing countries. The trade with socialist countries was about 40 percent of trade with the Soviet Union, about 25 percent to other Eastern European States and 35 percent with the other socialist countries (e.g. Cuba).
After the German reunification the monetary, economic and social Union on 1 July 1990 was created. The State-owned enterprises were privatized. At this time a fund was implemented to rebuild and increase the productivity of the industries in the former GDR area and to provide social security for the people. To finance this, the provinces from Western Germany had to pay a monthly fee into this fund. Moreover, the level of debt was dramatically increased. The infrastructure in the "new provinces" (former GDR provinces) has been improved after the reunification. Productivity per employee increased, but unit labor costs were significantly higher than in West Germany for a long time.

Jan-Philipp Berghold, 1820156901