Chapter 5: East Germany

Unlike the mainstream of transformation research, the research association does not treat the East German development as a special case; instead it is seen in connection with the changes taking place in West Germany’s social and production model. Thus, in East Germany one can observe the same transformation problems as in West Germany: ruptures in the development of the industrial structure and the production systems, erosion of gainful employment (Fordist style) and new social problems. On the one hand, the peculiarity of the East’s transformation (Umbruch Ost) lies in the fact that this change happens in an aggravated, accelerated and concentrated scenario; on the other hand, there is a different prehistory, i.e. a state socialist variety of Fordism and a ‘transformation by affiliation’. The chapter will justify and examine this assessment by falling back on the association’s own research and analyses, but also by employing differentiated findings about West and East Germany, taken from other chapters of the report.


Regulation via ‘transfer of institutions’

Back in the seventies, the GDR’s economic and social model had already lost its dynamics and lived on its substance. During the eighties, it got drawn into the political breakdown of the economic and social systems of state socialism in Europe. The peculiarity of the German constellation lay in its ‘transformation’ via affiliation. The institutions and organisations of the West German model were transferred to the East. Unlike in other Central European societies undergoing transformation, it was possible to ‘skip’ the politically complicated and long-winded process of institutional reconstruction. However, German unification did not occur in the peak phase of Fordism, but right in the middle of the West German model’s transformation. The transfer of institutions did not trigger a functioning transformation based on the West German model. German unification in the 1990’s could not repeat the economic miracle of the 50’s and 60’s. It was rather a matter of managing the transformation by searching for new development paths. Therefore, some of the East German developments can be understood as experiments with economic and socioeconomic structures.


Macroeconomic development and West-East-Transfers

In a short overview, the findings of comparative transformation research will be recapitulated. Important, internationally comparable economic and socioeconomic indicators will be used in order to clarify the basic differences between different development paths and to show the results which the different countries (with their different points of departure) have achieved in their particular transformation.


Fragmentation of economic development as a transition problem

In the GDR’s economic structure, up to 1990, the Fordist model of production was even more pronounced than in West Germany. The modernisation of this economic structure was brought about by rapid incorporation into the West German economy (privatisation through sale before restructuring). In a time of transformation, the world markets for Fordist mass products were for the most part already occupied, hardly grew at all and even shrank. At the same time, markets in Eastern Europe (USSR, Comecon) dwindled as international competition in these markets intensified. With their integration into West Germany’s industrial structures, large parts of the East German economy became obsolete. The first consequence was a far-reaching deindustrialisation.

Secondly, a small segment of industrial companies with above-average productivity developed. With a modernised Fordist production model, they achieved a dynamic corporate development by mobilising niches, market gaps and deficits within the West German industrial structure. They also succeeded in exploiting certain East German conditions and advantages. These were partly privatised companies from the GDR, partly new firms. Within this segment one finds branches of West German or international companies, but also independent firms run by East German proprietors.

Thirdly, there are many companies in East Germany which are temporarily functioning, but find themselves in constellations of survival, insecure in the long-term and without unique selling points. This applies in particular to the sector of those goods and services which are only regionally or locally tradable. In this third sector, to which especially the East German construction industry belongs, shrinkage processes are predominant, further intensified by migration and the demographic development in the coming years.

This fragmentation of economic development will be demonstrated, based on examples. Different case studies will serve to demonstrate and compare different patterns of fragmentation.


Transformation in East Germany

In this section, individual findings (especially from the chapters on Gender and Gender Regimes, Personal Distribution of Incomes, Employment Participation, Employment Trajectoies and Regional Disparities) will be demonstrated with regard to specific East German problems. Here, the connection between economic development, social problems and negative growth takes centre stage. At first we will outline the general situation of transformation; afterwards we will discuss commonalities and differences of developments in East and West Germany in their search for new development paths.


Responsibility for this chapter

Thünen-Institut für Regionalforschung Bollewick