German Reunification Case Study

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Trident University Yasmine Powder
POL201 Global Politics in the Modern World Module 1 Case German Reunification Professor Sara Lawson

These are the main challenges Germany has faced during the reunification process. First, the events of 1989-1992 highlighted the costs of reunification. From 1989 to 1992, the Gross Domestic Product (GDP) in the former German Democratic Republic lowered by 30 percent. Employment levels dipped by 35 percent and value added in industry decreased by more than 60 percent. The unemployment rate rose from zero to more than 15 percent. Joblessness rose to 33 percent if hidden unemployment consisting of early retirement, involuntary …show more content…
West German firms which are based in regions with strong social ties to the East are more likely to invest in East Germany between 1989 and 2007. The final estimates prove, other things being equal, that a direct social tie to the East poses the same effect on individual household income as a 49.3 percentage point (representing a 3.5 standard deviation) increase in the regional share of households who have such ties. From the perspective of an individual household, the major incremental benefit from a direct social tie to the East is very high if made parallel to the incremental benefit from higher-order social interaction. (Burchardi and Hassan, 2011).

References:
Burchardi, Konrad B; Hassan, Tarek Alexander. (2011). The Economic Impact of Social Ties: Evidence from German Unification. The NBER Working Paper Series.
Burda, Michael C; Hunt, Jennifer; Wolf, Holger; Yellen, Janet L. (2001). From reunification to economic integration: Productivity and the labor market in Eastern Germany / Comments and discussion. Brookings Papers on Economic Activity, 1( 2 ): 1-92.

FRG (2006). Federal Republic of Germany, 1945-48. World history at
KLMA. Retrieved * 2/27/11 fromhttp://www.zum.de/whkmla/region/germany/ger4548west.html.

FRG (2006). Federal Republic of Germany, 1949-69. World history
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