the economic model of the german democratic republic 1945 89 n.
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The Economic Model of the German Democratic Republic - 1945-89. Socialist Centrally Planned Economy. Based on that of the Soviet Union. State ownership of means of production. Central planning of all economic processes Nationalisation of industry Collectivisation of agriculture.

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Presentation Transcript
socialist centrally planned economy
Socialist Centrally Planned Economy
  • Based on that of the Soviet Union.
  • State ownership of means of production.
  • Central planning of all economic processes
  • Nationalisation of industry
  • Collectivisation of agriculture
modernisation
Modernisation
  • 1950 - State Planning Commission created.
  • Country’s first 5 Year Economic Plan introduced.
  • Achievements – relatively productive, almost self sufficient, decrease in unemployment, wage increase, industry growth
  • Problems – quantity rather that quality, lack of choice, inefficiency, sheer complexity and unrealistic goals of plan.
  • 1959 – Introduction of 7 Year Plan
new economic system nes
New Economic System (NES)
  • Late 1950’s - economic growth slows
  • Aimed to transform economy into dynamic and innovative system
  • Decentralisation - Associations of People's Enterprises (Vereinigungen Volkseigener Betriebe)
  • Fear that political decentralisation would follow
economic system of socialism 1967 70
Economic System of Socialism – 1967-70
  • Planning partially recentralised
  • Focus on technology sectors
  • Problems – too much emphasis on certain sectors, price increases
  • Failure to meet goals resulted in termination
the main task 1971
‘The Main Task’ - 1971
  • Higher standard of living in exchange for acceptance of SED’s leading force in society
  • Achievements – more consumer goods, more housing, job security and stable prices, increased prosperity
  • Ambitious programme exacerbated hard-currency debts

Erich Honecker

world economic crisis
World Economic Crisis
  • Late 70’s/ early 80’s - Explosion of oil prices – GDR heavily dependant on fuel imports, no natural resources
  • Economic recession
  • Increasing international debts
  • Efforts to increase production of exports required import of expensive equipment
to conclude
To conclude…
  • Centrally planned economies traditionally unsuccessful as can be seen in GDR model – inefficient, cannot detect consumer preferences, lack of incentives for innovation, lack or reward for hard work, infringes on individual freedom
  • Some failing factors specific to GDR -No natural resources, traditional economic links to west severed.
  • However… guaranteed employment & price stability, developed a competitive industrial nation, reasonable standard of living