3. Economic and Political State of East Germany

In 1949, the German Democratic Republic (GDR), which is also known as East Germany, was formed by the Soviet Union. Geographically, it is much smaller than West Germany because it is only made up of one-forth of Germany. Unlike the West Germany that adapted  democracy and free capitalist economy, East Germany is under communism that adapted the Marxist-Leninist dictatorship. This is also a part of the Soviet Union's plan to spread communism through out the world. East Germany also had a centrally planned economy (CPE). This means all economical plans that were to be made for the region was all controlled by the government. Through out the 1950s and 1960s, people from the East Germany was able to adapt collectivisation. And while planned economy usually get a bad reputation, they were able to increase their GDP and investment. In 1960s, they created the New Economic System and it was based on the ideas of Evsei Liberman. His ideas were much more modern and this can be seen on how they made prices more versatile and how companies were given control on their investments. However, its economical status had a drastic change in the end of the 1970s and in 1980s. Their oil crisis that happened in the 1973 made them have a huge debt and was not able to repay them thus causing an economical downfall.

As it can be seen in the graph above, West Germany's GDP is much more higher than East Germany's. This might be because of their different economy systems.