35 Years of Reunification: What Has Been Achieved in Eastern Germany and Where Are the Biggest Economic Issues?

Nevertheless, persistent disparities remain in economic performance and structural conditions compared to Western Germany. Gross domestic product of the five Eastern German states amounts to 72 percent of the West German level. Full convergence appears unlikely due to unfavourable demographic trends, the absence of large companies with own research and development departments, and the lack of metropolitan hubs for high-tech start-ups and productive industries. Investment levels have also stagnated at around 70 percent of the per capita value in Western Germany and no longer drive an economic catch up. The situation is somewhat better when Berlin is included, as the city is gaining economic potential and exerts positive spillover effects on the surrounding areas. However, continued convergence will require targeted economic policy support. The growing shortage of skilled labour can be mitigated by later retirement and increased openness to foreign workers. In terms of research and development, the focus should be on closer cooperation between universities, start-ups and existing companies. Furthermore, the digitalisation of public administration and businesses must be given higher priority in order to raise labour productivity, which still lags behind by 16 percent to the level of Western Germany.