For far too many German citizens, reunification in 1990 has meant 15 years of economic downturn, increasing unemployment and general deprivation. But encouraging signs of recovery are gradually beginning to emerge in the German economy. Prophetically speaking, what does reunification mean in the long run?
by John Ross Schroeder
The immediate results of reunification did not measure up to general expectations for both the former East and West Germany. As British columnist Bronwen Maddox stated, "Germany's decline from powerhouse to doubtful man of Europe has been much chronicled" (The Times, Aug. 23, 2005). The region that was East Germany has been plagued by high unemployment, and the wealthier western section of the country has grown somewhat weary of footing the bill for bringing the eastern section up to par economically.
Nonetheless, Germany invested heavily in bringing the railways and communications systems up to par, and the long-term results appear set to pay off in what was East Germany. Recent German figures show that "unemployment is at long last starting to fall." In addition, "Germany's big companies have restructured and cut their bloated cost base" and "unit labour costs have fallen sharply relative to other countries. In the past five years, Germany . . . has won a new competitive edge over France, Italy, the Netherlands and even Britain" (The Economist, Aug. 20, 2005).
The Economist is one of the most respected world affairs magazines. A special feature article in the Aug. 20 issue explains the progress already made in the German economy along with challenges and problems yet ahead (pp. 9, 62-64).
Meanwhile, the German stock market is pulling in investors from many European nations. As The Sunday Times reported, "Foreign investors are pumping billions into Germany as hopes rise that the country is turning the corner." Further: "German companies have become more competitive and are starting to reinvest their profits in the economy, and the unemployment rate, while still stuck above 10 per cent, dropped for the fourth successive month in July" (Aug. 28).
