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Welcome to a blog about East and West Germany Economical History!
In this blog, I will be talking about the history of how East and West Germany handled their economy after World War 2. This also includes its economy after their reunification in 1990. Furthermore, I will be comparing their economy with another country which is North Korea, a region that was also separated by the occupation and different ideologies from the US and the USSR. 

 Below is the list of topics I will be discussing:

  1. The Division of Germany
  2. Economical and Political State of West Germany
  3. Economical and Political State of East Germany
  4. North Korea and its division with South Korea
  5. Economical and Political State of North Korea
  6. The reunification of Germany
  7. Where are they now? North Korea
  8. Bibliography
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1. The Division of Germany

The aftermath of World War 2 ended up with the defeat of Germany. Germany was then divided into different four parts where it was occupied by the United States, Britain, France and the Soviet Union. Berlin was then divided again into west and east Berlin where the allies took control of the West and the East was taken control of the Soviet Union. While Britain and France were worn out, but both the US and the Soviet Union were still aiming to spread their different ideologies through out the world; the US with capitalism and the Soviet Union with communism. Their different opposing ideologies made both countries alarmed and realised their distrust on their past ally in World War 2. The division of Germany was then led between the Allies and the Soviet Union. Where the Allies occupied West Germany and the Soviet Union occupied East Germany. NATO, which stands for North Atlantic Treaty Organisation was created and signed by the Western Allies to help ensure their alliance on the 4th of April, 1949. West Germany adapted democracy and capitalism because of the Allies and were then called the Federal Republic of Germany. While the East Germany which was under the Soviet Union was called the German Democratic Republic. They adapted communism and was ruled under the power of the Soviet-aligned Socialist Unity Party of Germany. 

The division of Germany after their defeat in WWII.
As it can be seen, Berlin was then divided again by the four different allies.
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2. Economical and Political State of West Germany

The West part of Germany, which was called the Federal Republic of Germany (FRG) was occupied by the Allies which were the United States, France and Britain. Their democratic and capitalistic adaptations helped West Germany’s economical state after the World War 2. West Germany had its highest economical growth between 1950 until 1960. Their GDP had rose about 8% every year. In the 1960s, West Germany had become the most influential in their economic growth across Europe. Their sudden economic growth might be because of its adaptation of the Allies ideologies. After the 1950s, West Germany was able to catch up with Britain in terms of GDP per capita by 75%. Germany’s growth was slowed down because of their late modernisation towards their ancient peasant agriculture. Again, comparing to Britain, they were actually able to level up towards their economy before the World War 1. The occupation towards the Allies had become the catalyst that helped West Germany’s progress. 
The graph above shows the GDP Per Capita of West Germany after its separation with East Germany.
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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.

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4. History of North Korea and its division with the South

Japan's occupation of Korea was took over by the Allied forces after its defeat in 1945. While the US occupied the south region of Korea, the Soviet Union occupied the north region of Korea, specifically in 38˚ of the North latitude, which is also called the 38th parallel. Of course, both the US and the Soviet Union's different ideologies were spread out in the regions. South Korea was then named the Republic of Korea, where the US held elections as it adapted democracy. It was then led by President Syngman Rhee. They have Seoul as their capital city. North Korea, which is called The Democratic People's Republic of Korea that adapted communism was led by their first ever leader, Kim II-sung. Unlike West Germany, which held a democratic capitalistic economy, they were able to improve their economy in a fast period of time. However, South Korea which also held a democratic capitalistic economy was left with a poor government and military after the US left in 1949. East Germany that adapted a communism ideology was a bit slow in their economy. However, contrasting with North Korea that was also occupied by the Soviet Union, had a strong military defence because of the extra support by China and the USSR. The separation of North and South Korea was supposed to be temporary until an election has occurred. However, Kim II-sung made sure that no elections were made for North Korea by convincing the Soviet leaders. Their different ideologies also had made their reunification impossible as for right now.
The map of the division of North and South Korea. Pyongyang as North Korea's capital city and Seoul as South Korea's capital city.
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5. Economical and Political state of North Korea

North Korea was influenced by the ideology of the Soviet Union which is communism. They  have a planned economy and everything they have is basically owned by the government. The government also controls their economy activity. North Korea is being ruled by one family only. Their first leader Kim II-sung led North Korea for about 46 years until his death, which was then replaced by his son. His son, Kim Jong-il was the one who took over North Korea, again until his death which was then replaced by Kim Jong-un. North Korea is isolated from international trade or investment. They only have international trade or investments with the Soviet Union and China. Their lack of international trade and investment might be the cause of their really poor economy. This is because if they open up for international trade, and joint ventures with other countries, they will gain more profit. However, it is also caused by their military first policy where most of their money is used for military production. Once they tried to catch up with South Korea by making mega-projects for their people such as stadiums, thinking it would help their economy. However, it only made it worst because their people was not able to afford to pay. 
The difference of North and South Korea development can be seen in the map above. While lights from South Korea can be seen everywhere in their region. North Korea's light/electricity can only be seen in their capital city Pyongyang. 
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6. The Reunification of Germany

The reunification of Germany was officially established on October 3, 1990. By that time, West Germany's economy was still growing. However, their unification with East Germany slowed down West Germany's economy because of their different type of economy. This was also led to things such as their different policies, high taxes and unemployment. The unification did no good with East Germany as they still face economic problems. The problem that they were having was mosty on unemployment. Therer were also many declined resources such as textiles and more. Their agriculture was affected by the economy and became in a bad shape. The East and the West Germany has different GDP per capita, with the East Germany having the lower GDP per capita. They were only able to reach about 71% of West Germany's GDP per capita. Of course to solve this problem East Germany has to catch up with West Germany's economy activity so that they will have similar and maybe even the same level of GDP per capita. Researches have been said that in 2010, East Germany was only able to grow by 1.1% while West Germany will be able to grow by 1.5%. East Germany's economic and political downfall after their unification with the West can be partly judged by how it was not handled properly. 

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7. North Korea's economical state as for now

Up until now, North Korea still continue to have a planned economy with its communism ideology. Because of this planned economy, isolation and military-first policy, they keep on having a very poor economy. However, when referring to their military they have a pretty strong one. As for now, Kim Jong-un is the leader of North Korea. Their economy is very poor, with their GDP per capita of only $1,800 and is not even 3% of South Korea's GDP per capita. Most of their GDP comes from industry goods. They also have many factories. The percentage of their GDP for agriculture is only about 20%, which is why many of the people in North Korea are starving with the lack of food. Their food production is very low that the World Food Program has to sent 75,000 tons of food every year. Even until now, they are still isolated from international trading which can lead to joint ventures with other countries' companies that can help boost their economy. Boosting their economy leads to questions such as what happened if they unified with South Korea. And maybe that is why they never thought of unifying again. It also leads to predictions if the outcome of their reunification might be a failure just like West and East Germany. Either way, their different strong ideologies, might be hard to actually settle into one country.
A rare picture of how North Korea's food production is so scarce that some people would be eating grass. 
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BIBLIOGRAPHY


  • "Cold War." Cold War. N.p., n.d. Web. 22 May 2015. <http://www.johndclare.net/cold_war1_Germany.htm>.
  • "The East German Economy: The History of the Failure." The East German Economy: The History of the Failure. N.p., n.d. Web. 22 May 2015. <http://econc10.bu.edu/economic_systems/NatIdentity/EE/Germany/EGerm_Econ.html>.
  • "What You Need to Know About North Korea." History.com. A&E Television Networks, 15 Apr. 2013. Web. 23 May 2015. <http://www.history.com/news/what-you-need-to-know-about-north-korea>.
  • "North Korea." Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. N.p., n.d. Web. 23 May 2015. <http://www.heritage.org/index/country/northkorea>.




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