Economy of the German Democratic Republic

Economy of the German Democratic Republic

The Wartburg 311 from the 1950s to 1960s. Over 1.8 million automotives of the East German brand Wartburg were produced in the GDR.
Currency	East German mark
Fiscal year	1 January – 31 December (calendar year)
Trade organisations	Comecon and others.
Statistics
GDP	$159.5 billion (1989) (Nominal GNP; 17th)
GDP per capita	$9,679 (1989) (Nominal GNP; 26th)
GDP by sector	90% in industry and other non-agricultural sectors; 10% of GNP in agriculture (1987)
Gini coefficient	Not informed,
Labour force	8,960,000 (1987)
Labour force by occupation	37.5% industry, 21.1% services, 10.8% agriculture and forestry, 10.3% commerce, 7.4% transport and communications, 6.6% construction, 3.1% handicrafts, 3.2% other (1987)
External
Exports	$30.7 billion (1988)
Export goods	Machinery, transport equipment, fuel, metals, consumer goods, chemical products, building materials, semi manufactured goods and processed foodstuffs (1988)
Main export partners	USSR, Czechoslovakia, Poland, West Germany, Hungary, Bulgaria, Switzerland, Romania (1988)
Imports	$31.0 billion (1988)
Import goods	Fuels, metals, machinery, transport equipment, chemical products and building materials (1988)
Main import partners	CMEA countries 65%, non-Communist countries 33%, other 2% (1988)
Gross external debt	$20.6 billion (1989)
Public finances
Revenues	$123.5 billion (1986)
Expenses	$123.2 billion, including capital expenditures of $33 billion (1986)
Economic aid	$4.0 billion extended bilaterally to non-Communist and less developed countries (1956-1988)
All values, unless otherwise stated, are in US dollars.

Like other states which were members of the Comecon between 1949 and 1991, the German Democratic Republic (GDR – East Germany) had a centrally-planned economy (CPE) similar to the one in the former Soviet Union (in contrast to the market economies or mixed economies of capitalist states). The state established production targets and prices and also allocated resources, codifying these decisions in comprehensive plans. The means of production were almost entirely state-owned. The East German economy was one of the largest and one of the most stable economies in the "Second World" until Communism in Eastern Europe started to collapse in 1989.

Each occupation power assumed authority in their respective zones by June 1945. The Allied powers originally pursued a common German policy, focused on denazification and demilitarization in preparation for the restoration of a democratic German nation-state. Over time, however, the western zones and the Soviet zone drifted apart economically, not least because of the Soviets' much greater use of disassembly of German industry under its control as a form of reparations. Military industries and those owned by the state, by Nazi party members, and by war criminals were confiscated. These industries amounted to approximately 60% of total industrial production in the Soviet zone. Most heavy industry (constituting 20% of total production) was claimed by the Soviet Union as reparations, and Soviet joint stock companies (German: Sowjetische Aktiengesellschaften -SAG-) were formed. The remaining confiscated industrial property was nationalized, leaving 40% of total industrial production to private enterprise. The reparations seriously hindered the ability of East Germany to compete with West Germany economically.

Retail trade in the east was slowly being absorbed by two state-controlled organizations (Konsum and Handelsorganisation -HO-) which were given special preferences. On 2 January 1949, a two-year plan of economic reconstruction was launched, aiming at 81% of the 1936 production level, and, by cutting 30 per cent off production costs, hoping to raise the general wage level 12% to 15%. The plan also called for an increase in the daily food ration from 1,500 to 2,000 calories.