Twenty years German unity - a retrospect at the passed two decades

Gerhard Fisch
Current challenges of the East German transformation process for regional structural policy

Abstract

Measured with respect to the starting-situation, the East German federal states have experienced a remarkable economic development in the past 20 years. By means of considerable transfers it has been possible to establish a variety of firms with employment opportunities and perspectives through the establishment of a modern infrastructure and through direct investment promotion.Measured with the goal of self-sustaining economic growth, some regions in East Germany have actually established an economic structure which is likely to survive also the more difficult adaptations in the course of global competition. However, large parts of the East German states are still far removed from this. The existing entrepreneurial structures are unstable and on the whole the head offices of large entrepreneurs, a diversified sector structure, successful "hidden champions" as well as entrepreneurial research and development activities are still lacking. And measured with the constitutional aim of equivalent living conditions, the new federal states still have quite a long way to go. According to the comprehensive indicator of the Joint Task "Improvement of the Regional Economic Structure" (GRW), the East German regions still lag behind the West German regions. This shows that the development is still not completed after 20 years.

The transfers were clearly reduced in the course of time. Further cutbacks are certain, such as the ending of the investment grant and the strong reduction of the EU structural funds. However, in order to support the East German regions further a minimum volume for regional policy is necessary. Investment promotion should remain the centrepiece of regional promotion also in the future. It is most likely to help the East German states to overcome their structural deficits particularly in the sector of innovations. For this the room for manoeuvre of subsidy law must be maintained.

The process of catching up in East Germany is made particularly dif mographic development. Therefore the aim followed by the federal government of the strengthening of rural areas and the measures of the GRW play an important role. It must be absolutely prevented that the regions are caught in a downward spiral of population decline and ageing, over-dimensioned infrastructure and declining employment opportunities of the population. Efforts must be in the foreground to strengthen the potential of the regions in order to prevent a continuous alimentation. The costs for the economy as a whole would be immense.