Paul J. J. Welfens The editor is pleased to present a second edition of Economic Aspects of German Unification which includes new chapters and several postscripts. Almost five years after unification output in the ex-GDR is back to its 1989 level. Due to a massive intra-German resource transfer consumption per capita in eastern Germany has not fallen as much as output and employment which reduced by one-fifth within three years. Given high West German transfers which represented about 5% of West German GDP and more than 50% of East German GDP the fall of industrial output could have been much stronger than had politically been feasible. Hence structural change necessary for productivity growth was dramatic in the ex-GDR where the goods producing sector (manufacturing, mining, energy and construction) strongly changed its proportions; within four years construction almost doubled, and the share of investment goods production reduced by 10 percentage points between 1990 and 1994 and is· now down to 21. 1 %. Mining lost two-thirds of its share in the producing sector which itself was reduced relative to GDP. The share of the services industry increased by 5 percentage points between 1991 and 1994, but with a share of 27. 7% in East Germany's GDP it was still about 9 percentage points lower than in western Germany. By contrast, government accounted for 20. 9% of GDP in eastern Germany, but for only 13. 2% in western Germany.
|Publisher:||Springer Berlin Heidelberg|
|Edition description:||2nd ed. 1996. Softcover reprint of the original 2nd ed. 1996|
|Product dimensions:||6.69(w) x 9.53(h) x 0.05(d)|
Table of ContentsIntroduction: Economic Aspects of German Unification.- I. Structural and Macroeconomic Changes.- A. The Structural Renewal of Eastern Germany: Some Initial Observations.- 1. Introduction: Why Structural Analysis of the East German Economy?.- 2. Determinants of Structural Development.- 2.1 The Economic Policy Framework.- 2.2 The Factors of Production and their Prices.- 3. Structural Changes in the Eastern German Economy.- 3.1 Industrial Structures.- 3.1.1 Production.- 3.1.2 Factor Input.- 3.1.3 Agriculture.- 3.1.4 Small and Medium-Sized Enterprises.- 3.1.5 Production and Employment Structures.- 3.1.6 Economic Structures in East and West Germany a First Appraisal.- 4. Conclusions.- B. Integrating the East German States into the German Economy: Opportunities, Burdens and Options.- 1. Introduction.- 2. The Currency Union: Its Genesis and Impact.- 3. Pattern and Extent of Structural Adjustment Needed.- 4. The Starting Position of Individual Industries.- 5. Reconstructing the Capital Stock.- 6. Structural Adjustment Policy.- 7. The Financial Burden on the Public Sector.- 8. Concluding Remarks.- 9. Postscriptum: East Germany in Transition.- 9.1 Macro-Economic Imbalance.- 9.2 Structural Adjustment.- 9.3 External Trade.- 9.4 Employment and Growth Potential.- C. Sectoral Shocks and Structural Adjustment in the East German Transformation Process.- 1. Unification Concept and Transformation Shocks.- 2. Past Macroeconomic and Sectoral Performance.- 2.1 Production and Employment Trends.- 2.2 Manufacturing.- 2.3 Small Businesses.- 2.4 Services.- 3. Investment and Labor Productivity.- 3.1 Investment Activities.- 3.2 Labor Productivity.- 4. Regional Developments.- 5. Policy Orientation and Growth Prospects.- 6. Conclusions.- D. Intergovernmental Fiscal Relations after German Unification: Problems and Solutions.- 1. Introduction.- 2. Basic Elements of the System of Intergovernmental Fiscal Relations in Germany.- 2.1 The Distribution of Public Functions between Levels of Government.- 2.2 The Structure of Public Revenues.- 2.3 Primary and Secondary Distribution of Taxes: An Overview.- 2.4 The Vertical Assignment of Tax-Revenues.- 2.5 Horizontal Allotment of Local Tax Returns.- 2.6 Fiscal Equalization Among Länder.- 2.6.1 Horizontal Turnover Tax Distribution.- 2.6.2 The Fiscal Equalization Among Länder.- 2.6.3 The Federal Supplementary Grants and Other Elements of the System of Intergovernmental Fiscal Relations.- 3. Interim Regulations for Unified Germany and their Necessity.- 3.1 The Political and Economic Framework after Unification: The Development 1990–1994.- 3.1.1 The Situation in East Germany.- 3.1.2 The Situation in West Germany.- 3.1.3 The Necessity for Interim Regulations.- 3.2 Interim Regulations for the New Länder until 1994.- 3.2.1 Separated Turnover Tax Distribution.- 3.2.2 A Separated Fiscal Equalization System Among Länder.- 3.2.3 The German Unity Fund.- 4. Long-Term Solutions for Newly Formed Germany: The Federal Consolidation Program and Subsequent Measures.- 4.1 Overview.- 4.2 Changes in the Turnover Tax Distribution.- 4.3 Changes in the Horizontal Fiscal Equalization System Among Länder.- 4.4 New Functions for the Federal Supplementary Grants and the Financial Aids.- 4.5 Financing the New Regulations.- 5. Conclusion.- E. Macroeconomic Aspects of German Unification.- 1. A New Germany.- 2. Unification in International Perspective.- 2.1 A Comparison With Other Eastern Countries.- 2.2 Implications for the West.- 3. The Currency Conversion Problem.- 3.1 Purchasing Power Parity.- 3.2 The Problem of Two-sided Competitiveness.- 3.3 The Money Overhang and the Real Asset Overhang.- 3.4 The Planned and the Actual Money Supply.- 3.5 Wealth Effects of the Currency Conversion.- 3.6 The Bundesbank Unification Gain.- 3.7 Portfolio Reactions.- 3.8 Demand Reactions.- 4. The Privatization Problem.- 4.1 The 49 Rule and the Pre-Coasian State.- 4.2 The Legal Role of the Treuhandanstalt.- 4.3 Risks of the Privatization Process.- 4.3.1 Sluggish Privatization.- 4.3.2 Cross-Subsidization.- 4.3.3 Competition and Market Concentration.- 4.3.4 The Erosion of Sales Prices.- 4.4 Another Method of Privatization.- 5. Structural Unemployment.- 6. Conclusion.- F. Comments.- G. Transforming a Socialist Economy: Currency Unification, Banking Reform and Capital Markets.- 1. Socialist Economies and Systemic Transformation.- 2. Money and Banking in a Traditional Socialist Setting.- 2.1 Banking System.- 2.2 Active and Passive Money.- 2.3 Two Distinct Monetary Problems.- 3. Money, Credit and Banking in a Reformed System.- 4. Monetary Problems in the Process of Transition.- 4.1 German Economic Unification.- 4.2 Some Lessons from East German Reform.- 4.3 Elements of a Monetary and Financial Reform.- 5. Perspectives.- H. Comments.- II. National Challenges.- I. Labor Markets and Social Security Systems Facing Unification: Systemic Challenges in Germany.- 1. Introduction.- 2. Labor Markets.- 2.1 Facts and Figures.- 2.2 Perspectives.- 2.3 The Legal Framework.- 2.4 The Promotion of Skills, Training.- 3. Social Security Systems: Health Insurance, Old-Age Pensions.- 3.1 The Systems of Social Security.- 3.2 Health Insurance.- 3.3 Old-age Insurance.- 4. Financing of the Social Security Systems.- 5. Conclusions.- J. Comments.- K. Environmental Protection: Problems and Prospects in East and West Germany.- 1. Introduction.- 2. Water Management.- 3. Destruction of Areas.- 4. Noise Abatement.- 5. Outlook.- L. Comments.- M. Structural Adjustment and Privatization of the East German Economy.- 1. Introduction.- 2. Structural Adjustment: Necessity and Perspectives.- 3. Deregulation and Privatization.- 3.1 Promoting Competition.- 3.2 Improving Economic Performance.- 3.3 Improving the Public Finances.- 3.4 Widening the Ownership of Economic Assets.- 4. The Treuhandanstalt: Organization, Objectives and Problems?.- 5. Privatization Strategies.- 6. Conclusions.- 7. Postscriptum: The Privatization Results.- N. Comments.- O. Government Support for Restructuring the East German Economy.- 1. Introduction.- 2. The East German Economy in Transition.- 3. Criteria for Evaluating Different Types of Government Support.- 4. Prospects for Economic Policy.- P. Comments.- III. International Perspectives.- Q. German Economic Unification and European Integration: Prosperity without Stability?.- 1. Introduction.- 2. German Economic Unification.- 2.1 Rapid Progress in East German Economic Restructuring.- 2.2 Germany’s Labor Market Disequilibria.- 2.3 Supply-Side Changes in Germany and Prospects for a New German Economic Miracle.- 3. European Integration.- 3.1 The Dynamics of the Single Market.- 3.2 Problems with EU Enlargements.- 3.3 Instability in the Political and Economic Sphere?.- R. External Aspects of German Unification: The Polish View.- 1. Introduction.- 2. Short-Term Consequences for Poland of German Unification.- 3. Long-Term Impact of German Unification on the Polish Economy.- 4. Policies Towards Poland’s Integration into the United Europe.- S. Comments.- T. Economic Reform in the USSR and Prospects for Trade and Economic Relations with Unified Germany.- 1. Introduction.- 2. Difficult Reform Situation.- 3. Economic Relations with Germany and Western Europe.- 3.1 Economic Relations with Germany.- 3.2 Perspectives.- U. Comments.- V. German Unification as an Incentive for Institutional and Organizational Changes within the EC: A French View.- 1. Introduction.- 2. New Perceptions and Old Apprehensions.- 2.1 An Accelerated Process.- 2.2 Two Attitudes.- 2.3 Five Problems.- 3. Institutional Changes.- 3.1 Within Germany.- 3.2 Within the EC.- 3.3 The EC and the Rest of the World.- 4. Organizational Effects.- 4.1 Structural Adjustments.- 4.2 A More Activist Government.- 4.3 Effects on Industrial Organization.- 5. Conclusions.- W. Global Economic Rivalry: New Perspectives on Germany (the EC), Japan and the United States.- 1. Introduction.- 2. Trade Talks or Trade Tangles.- 2.1 European Unification and European Preoccupations.- 2.2 U.S. Policy Responses.- 2.3 Some Policy Recommendations.- 3. Macroeconomic Coordination and the Coming Global Capital Shortage.- 3.1 Economic Shock Wave.- 3.2 Shifting Investment Patterns.- 3.3 Emerging Monetary Union.- 3.4 Ebbing Dollar Influence.- 4. Conclusion and Policy Recommendations.- X. Comments.- Y. EC Integration and Economic Reforms in CMEA Countries: A United Germany as a Bridge Between East and West?.- 1. Introduction.- 2. German Unification from a European Perspective.- 2.1 The Path to Unification.- 2.2 The Economic West-East Divide in the Unified Germany.- 2.3 Major Aspects of Germany’s Bridging Function.- 3. EC Problems.- 3.1 European Opportunities for Trade and Investment.- 3.2 German Unification and Economic and Monetary Union in the EC.- 3.3 German Unity and the EC’s Trade Policy Stance.- 3.3.1 EC Protectionism.- 3.3.2 Restoring Historical Trading Patterns in Central Europe?.- 4. Germany and the CMEA Countries in a Divided Europe.- 4.1 Support for Eastern Europe: EC-Widening?.- 4.2 Germany’s Systemic Transformation as a Model for Eastern Europe?.- 5. Global Perspectives and Conclusions.- Z. Comments.- Map of Western and Eastern Germany.- Appendix: Selected Data on Western German and Eastern Germany.- List of Authors and Conference Participants.- List of Tables and Figures.