The Federal Office for Building and Regional Planning

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

IzR 10/11.2010, Ed.: BBSR

Gerhard Heimpold
Between de-industrialisation and re-industrialisation. Is the East German industry a stability factor of regional economic development?

Abstract

The article considers the development of the industry in the new federal states since the beginning of the 1990's. Measured with respect to the development of the added value, the East German industry has developed into a motor of growth and a stabilisation factor. In employment, increases worth mentioning were observed first in the years 2006 to 2008. The problem of the ailing fixed capital stock which had its origins in the centrally administered economy of the German Democratic Republic could be overcome thanks to above-average investments, and also the long-lamented deficiency of too high unit labour costs in comparison to the West German industry could be removed. The productivity reached 85% of the West German comparative value in 2009. Regardless of this success, considerable structural weaknesses continue to exist. The intra-industrial structures show a strong specialisation in labour-intensive branches and manufacturing functions, whereas technology-intensive branches - if one disregards a few exceptional regions (Berlin, upper Elbe valley/eastern Ore Mountains, eastern Thuringia) are more weakly represented. For this reason the East German industry does not reach the export intensity of the West German industry by far. Although the stronger internal orientation has reduced the negative impacts somewhat in the economic crisis 2008/2009, a lower ex port orientation of the East German industry constitutes a drawback. A further structural change in favour of technology- and human capital-intensive industrial activities will be necessary. Securing the highly qualified specialised workforce necessary for this will be a central challenge for enterprises and economic policy in the coming years in view of the demographic change with the ageing of the population and the out-migration especially of young people.

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