The economic modernisation of East Germany

1. The economic modernisation of East Germany

2. Evidence of a successful economy: • Agriculture: - By 1961 90% of agricultural production came from collective farms. • Industry: - Banks and large companies were nationalized by 1948 only 39% of industry remained in private hands • Socially: - Living standards and industrial output were the highest in the Soviet bloc

3. Explanation for success: - Agriculture: • seizing land from estates and distributing it to the peasants and refugees • 1949 collectivization • Industry: - 1948 a two year plan is introduced followed by a five year plan in 1950 to place emphasis on heavy industry. - Economy integrated into the Soviet economy through Comecon

4. Elements of failure: • Living standards and rates of industrial production were well below those of West Germany. • Prices of food, houses and basic necessities were kept down but consumer goods prices were high. • The regime was unpopular. • Many East Germans left for west Germany via Berlin. • By1961 2.7 East German’s had left via Berlin to attempt to resolve this Russia erected the Berlin wall in 1961.

5. Reasons for elements of Failure: • Russia turned their zone into a satellite state, it was a single party communist state run on Stalinist lines. • At the end of the war the Russians stripped their zone of ₤7 billion worth of industrial assets as reparations. The re distribution of land created a large number of small inefficient farms. • Emphasis was placed upon heavy industry and consumer goods were neglected. • People leaving East Germany was a problem as many who left were young and skilled .