The progress of the new states in Germany appears impressive, especially when compared to their original status with respect to the development of infrastructure such as power grids, roads, transport, etc. After the unification of western and eastern Germany under the legal system of the Federal Republic of Germany, the living standards of both began to converge.. Growth in western Germany which stood approximately at 40%, collapsed between 1989 and 1991. The growth of East Germany accelerated considerably to an average rate of 4% between 1992 and 2002, with a remarkable acceleration to a level of 6.6% between 1992 and 1997.
[...] The acceleration of prices responded to pressure on the productive system and the labor market, and resulted in the reunification boom. The immediate degradation of price competitiveness resulting from the conversion of Ostmark parity can be estimated at approximately 10%. If other indirect effects are also taken into account, (increased interest rates, overvalued the deutsche mark, rising public debt and current account surpluses resulting melt), the bill is even more important. The balance of financial transfers in the development of the eastern part of the country is evident regardless of the chosen indicators. [...]
[...] In the financial services sector, real estate and business services, productivity per employee reached of the level of the west against for salaries. The long term trend is clearly in the absorption of this differential, but the rate of the convergence of productivity is too slow. At the rate at which productivity increased between 1997 and 2001, it would still take decades to achieve equality. Hence the need to hold down wages, which was less favorable to growth, arose. In the “productive” industry, the CSU's are lower than those of the West since 1999 (nearly at end 2001). [...]
[...] has since surged to At the same time, employment opportunities in construction exploded (up 50% between 1991 and 1995) to represent of the population employed. Investment in this sector, as reported by the labor force, was of the level of western Germany in 1992 (which is already high compared to other indicators). In 1994, it reached 160% of the level of Western Germany and 180% in 1997. This bubble of investment in the construction sector was followed by a crisis in 1995. [...]
[...] A substantial proportion of EU aid thus diminished and was eventually lost, while the much lower level of wages in the East enabled it to put up a stiff competition . The current situation is far from satisfactory and there are legitimate grounds for concern. The halt in growth since 1997 may however be an opportunity to rethink the development process of new states. The construction sector must compensate for its past excesses, which will take time: if we prolong the average correction rate achieved since 1997. [...]
[...] In the wake of increased wages, income from other sources also increased, particularly the incomes of pensioners, following a conversion system in favor of pensions and indexation of pensions to wages. In 1999, the average pension received in the East exceeded that of the West by for men and for women. The gap is explained by the fact that the rate of participation of women in economic activities is higher in Eastern Germany. This gap in favor of East Germany is offset by the fact that pensions represent a much larger portion of total income for retirees. [...]
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