Areal structure of economy in East Germany after the unification of Germany

Abstract

Unification of Germany has put East Germany in the position of being a laboratory, a good example of areal changes in the world. At the time of unification the share of East Germany in the whole German GDP was only 7.2% in 1991, but owing to large transfers for East Germany and to the foreign investments, it became 10.9% in 1995. Unification of the currency brought a favorable exchange rate (1:1) for East German, but it caused a weakening of the competitive power of East German industries on the world market. All state owned properties and enterprises were put under the control of Treuhandanstalt, which reprivatised, privatised or sold them to West German or foreign companies. Many profitable enterprises were bought as "fillet" by West German big companies and the rest as "fat and bone" by foreign companies, among which French, USA and British dominated. The areal structure of economy in East Germany was worked out by some geographers during the age of DDR (German Democratic Republic), but none have yet tried, because the time is not sufficient since the unification of Germany. The contrast between "Industrial South and Agricultural North" is very clear and rooted in natural conditions and in a long history. Five such economic regions may be distinguishable: agro-industrial region along Baltic coast, agricultural region on low-land in the Middle, mining and industrial region in the South, Sachsen = Thüringen industrial region, and Berlin.