Privatization of East Germany Research Paper Example | Topics and Well Written Essays - 1500 words

Privatization of East Germany - Research Paper Example It was considered to be at the same economic level as a third world country (Farazmand 41). On the other side of the wall, the westerners enjoyed a lot of prosperity in their economy along with an economic boom. This was before the reunification of the two sides in the year 1991. The eastern part was under communism rule whereas the western part was under a democratic regime. The practices in the west led the east to lag behind in terms of their routines, achievements and demographics. It also led to their underproduction, lack of proper resource utilization, automation and prospects for growth in the future (John 32). After the reunification of the western and eastern states in the year 1991, the German state encountered a high level of unemployment along with an increase in taxes. The results of the communist policies on the East German population led to the fleeing of thousands of their people into the western part (John 54). This culminated in the building of the wall to stop the further entry of the easterners in the year 1961. The east German people lacked the ability to think autonomously and engage in the activities of risk-taking. These people also had fewer levels of sophistication as compared to their counterparts on the west of Germany. The immigration of the easterners to the west caused many problems in unemployment in their industries. However, the trend brought many advantages to the western manufacturing industries. This is because the labour costs decreased because of the increase in the available labourers (Philip 52). The manufacturing costs that the west incurred also reduced a nd this gave them an increased advantage in their competitiveness around the globe. By the time the communist regime fell in the eastern part of Germany, their authorities were experiencing several problems. The authorities in the east were unable to subsidize bankrupt manufacturing industries and their production had decreased.