Economy
After the division of Germany into two separate countries in 1949, the East and West German economies developed in radically different ways; East Germany's was based on central planning and government ownership of virtually all productive resources and West Germany's was built upon private enterprise with some government regulation.
West Germany underwent virtually unbroken economic expansion after World War II, when much of the country lay in ruins. In just a few decades it rose to become a world economic power. Many factors combined to produce this remarkable recovery, often called an “economic miracle.” Among them were Marshall Plan financial aid; a large, highly skilled, energetic labor force; the replacement of war-ruined factories with up-to-date ones; and membership in the European Community (forerunner of the European Union).
Also during this period, West Germany's standard of living became one of the highest in the world. Its total economic output was surpassed in Europe only by that of the Soviet Union. In international trade West Germany was a world leader, normally second only to the United States.
East Germany's economy generally lagged behind that of West Germany, largely because East Germany had fewer resources and a much smaller population. Recovery from the devastation of World War II was slow. It was hindered by heavy reparations to the Soviet Union, lack of outside financial aid, low levels of investment, and severe labor shortages, resulting partly from the escape of several million workers to the West. Dislike of the Soviet-imposed economic system also hampered development. It was not until the early 1960's that industrial output reached prewar levels.
By the late 1980's, East Germany's economy had grown to be one of the most productive economies in the Communist world. Also, among all Communist countries. East Germany had the highest income per person. However, East German products were generally of lower quality than those made in West Germany and most East German factories were older and less productive than those found in West Germany.
In 1990 East and West Germany were reunified. Because their economies were so different, the integration of the East German economy into that of West Germany proved to be very difficult and took many years to complete.
Numerous problems occurred after reunification, especially in the new eastern state. Among these problems was a rise in unemployment as demand for products made in the eastern states declined and many outdated factories closed. Also, wage levels in the eastern states did not keep pace with rising prices, causing hardship for many. The enormous costs involved in updating the former East German economy have meant slow economic growth for Germany. Despite the many problems associated with the economic integration of the new eastern states into the market economy of the Federal Republic, the nation's economy as a whole remains one of the strongest in the world.
Germany's manufacturing industries are extremely diverse, producing a great variety of consumer and industrial goods. The metallurgical, mechanical and electrical engineering, and chemical industries were well-established before World War II and were revived with great success after the war. Their products include iron and steel, motor vehicles, industrial machinery, machine tools, turbines, generators, electrical appliances, photographic and optical equipment, plastics, fertilizers, and dyes. There is also large-scale production of electronic equipment; textiles and clothing; foods and beverages, especially beer; wood and paper products; leather goods; and ceramics. High-quality handicrafts are also produced.
Since Germany began industrializing in the mid-19th century, the largest concentration of heavy industry has been in the region called the Ruhr. Local coal provided the basis for the industrial development here. Major cities in the Ruhr include Dortmund, Duisburg, Düsseldorf, and Essen. Berlin is the single largest producer of manufactured goods. Other manufacturing areas include those in and around Cologne, Frankfurt am Main, Hamburg, Mannheim, Ludwigshafen, Munich, Dresden, Zwickau, Magdeburg, Leipzig, Halle, and Erfurt.
Though not one of the major sectors of Germany's economy, agriculture is important in that it provides a large share of the nation's food.
During 1949–90, virtually all the farms in East Germany were owned and operated by the government while in West Germany farms were privately owned and operated. After reunification, the German government began to privatize farms in eastern Germany. Farms in Germany average about 50 acres (20 hectares), and about 4 per cent of the country's workforce is in agriculture.
Livestock products, especially beef, pork, and dairy items, account for the greatest share of Germany's agricultural income. The principal crops are grains, mainly wheat, barley, oats, and rye; sugar and fodder beets; and potatoes. Apples, plums, cherries, peaches, and pears are widely grown. Grapes from the southwest, especially the Rhine and Mosel valleys, yield virtually all of Germany's wine.
Coal is the most important mineral in Germany. The nation is a major producer of anthracite and a world leader in the production of lignite. Anthracite is produced primarily in western Germany, especially in the Ruhr and in the Saar. It is used mainly by the iron and steel industry. Lignite is mined largely in eastern Germany, especially near Cottbus. It is used chiefly to generate electric power and to produce coal gas, and by the chemical industry as a raw material.
Germany is also a major producer of potash and gypsum. Other minerals produced include lead, zinc, copper, nickel, salt, and sulfur. Germany imports most of its iron ore, mainly from Brazil, Ukraine, Canada, and Australia.
Forests cover almost 30 per cent of Germany but yield only a small portion of the wood needed annually. They consist mainly of conifers, especially spruces, pines, and firs. Beech, oak, and birch are among the common deciduous trees. Germany pioneered the practice of scientific forestry, and its forests have long been considered to be among the finest in the world.
Germany's fish catch is fairly large, but far below that of the European leaders. It consists primarily of cod, redfish, pollock, mackerel, and herring, taken from the North and Baltic seas and distant Atlantic waters. Cuxhaven, Bremerhaven, Hamburg, Kiel, and Rostock are the chief fishing ports.
Germany's highway system, especially in the western states, has undergone almost continuous improvement since World War II to accommodate increasing amounts of traffic. The system includes an extensive network of expressways called autobahns. Most road links between the eastern and western states that were severed after World War II have been reestablished.
The integration of the railway system of the former East Germany into that of the Federal Republic is underway. In general, the western railways are more modern and efficient than those of eastern Germany. Most of the main-line trackage is electrified. In 1991 Germany's first high-speed electric train, the Intercity Express, began operation between Hamburg and Munich.
Few countries use rivers and canals as intensively as does Germany. The Rhine system is the waterway most heavily used. Among the chief canals are the Mittelland Canal, which extends east-west across Germany, and the Dortmund-Ems, Kiel, Oder-Spree, Oder-Havel, and Elbe-Havel canals. The Rhine-Main-Danube Canal links the Danube and Main rivers through Nuremberg, allowing traffic to move between the North and Black seas. Duisburg is the chief inland port and probably the busiest inland port in the world. Hamburg, Bremen. Wilhelmshaven, and Rostock are major maritime ports. Germany has a large merchant marine.
Lufthansa German Airlines, which is partially owned by the government, is the national carrier. It provides domestic and international service. There is also service by numerous foreign airlines operating through a number of international airports, chief of which are near Frankfurt and Berlin.
Germany has more than 350 daily newspapers. Major dailies include the Bild-Zeitung, the Frankfurter Allgemeine Zeitung, and the Süddeutsche Zeitung. There are both nonprofit and commercial radio and television stations.
Germany depends heavily on international trade to maintain its economy. Trade is greatest with other members of the European Union, especially France, Great Britain, the Netherlands, and Italy. There is also considerable trade with the United States. Trade with the countries of eastern Europe is relatively small, but rapidly increasing. Principal imports include mineral fuels, particularly petroleum; machinery; chemicals; and food. Exports include machinery, transportation equipment, electrical equipment and appliances, and chemicals.
Germany's basic unit of currency is the euro.
Tourism is a major industry. Spas, resorts, scenic mountains, the Rhine valley, and well-preserved medieval towns and villages are among the chief attractions. One of the world's largest international trade fairs is held in Leipzig twice a year. The international book fair held annually at Frankfurt am Main is a major event in the publishing industry.
