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East Germany


The East German economic leadership published its directive on the 1986-90 Five-Year Plan during the Eleventh Party Congress of the SED in April 1986. The basic components of the "economic strategy for the 1980s," with the general goal of "intensification," remained in effect.

Specific targets for the plan were relatively modest. National income was to grow at 4.4 to 4.7 percent annually (the average rate for 1981-85 was 4.4). Industrial goods production was to increase by 3.7 to 4.1 percent annually; the fastest growth was planned for the electrical engineering and electronics sectors. In general, the process of concentration in industry was to continue, with additional production stages integrated into the Kombinate. With regard to energy, the increasing use of domestic lignite was to continue. By 1990 lignite was to meet about 78 to 80 percent of primary energy needs. Nuclear energy would provide 15 percent of electric power by 1990. Apparently the 1986 nuclear reactor accident at Chernobyl in the Soviet Union and the worldwide decline in oil prices had not brought about a change in East Germany's energy policies, although public statements by East German leaders suggested that some reappraisal was occurring. Primary energy consumption as a whole was to grow by only 1 percent per year. In agriculture, crop and livestock production was to be stabilized at the 1985 level--actually an ambitious target since 1985 was a record year.

The 1986-90 plan called for special efforts in what was called "key technology," which included microelectronics, modern computer and automation technology, industrial robots, and biotechnology. Inputs from these areas were expected to boost productivity in numerous ways. The plan expected the major impetus for economic growth to come from research and development, which was expected to improve production efficiency, increase the quality of existing production, and introduce new high-quality products. The government hoped in particular that in the coming five years the Kombinate would be able to generate from their own resources both a larger proportion of the investment funds they needed and new efficiency measures, technologies, and products. This objective entailed a modest degree of controlled decentralization, comparable in some respects with reforms that were being proposed in the Soviet Union. Western observers anticipated no radical procedural changes, however, given the caution customarily displayed by the East German leaders and their public praise for "tried-and-tested policy" and "the proven course."

The 1986-90 plan targets suggested that after the strenuous efforts made in the early 1980s to increase exports--and the domestic bottlenecks these efforts produced, especially for consumers--there would be some effort to promote both investment and private consumption, although exports were still to have a high priority. Investment efforts would continue to focus on modernization and improved utilization of existing resources, but the government had relaxed somewhat the restrictive investment policies of the previous plan period. For consumers, the projected growth of retail trade turnover in manufactured goods (a measure of consumption) was 5.3 percent, compared with 4.2 percent during the previous period. Prices for basic consumer goods were to remain constant until 1990. The plan called for an increase in the supply of consumer electronics, technical goods, sports and leisure goods, furniture, building materials, and quality clothing in particular. Finally, the housing program, long a high priority, would continue and would be virtually completed by 1990.

Some Western observers suggested that, with regard to inefficiencies within the East German economic system, many of the most obvious and least disruptive measures to improve productivity had already been taken. In the mid-1980s, commitment to central planning remained strong and continued to limit the reform options available to the planners. Consequently, it was possible that the East German leadership would seek to expand the country's productive capacity through extensive and potentially expensive investment and technological upgrading. East Germany's improved credit status in the mid-1980s made this approach a viable option.

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Current English-language sources of information on the East German economy are few in number. The East German government's Central Statistical Office publishes reports concerning fulfillment of annual and five-year plans in the English-language series entitled "Documents on the Policy of the German Democratic Republic." For a retrospective view of aspects of the economy's development, Economic Reform in East German Industry (translated from the German) by Gert Leptin and Manfred Melzer is helpful. An interesting study of consumer conditions in East Germany is The Consumer under Socialist Planning: The East German Case by Phillip J. Bryson.

In German, two major sources of information are the East German Handbuch Deutsche Demokratische Republik (1984) and the two-volume West German DDR Handbuch (third edition, 1985), edited by Hartmut Zimmermann et al. The ongoing publications of the Institute for Economic Research in West Berlin, particularly its DIW Wochenbericht, are excellent sources of information. The East German Statistisches Jahrbuch, with its yearly report of official statistics, is indispensable. The party newspaper Neues Deutschland and the monthly journal Wirtschaftswissenschaft provide ongoing accounts of economic developments. (For further information and complete citations, see Bibliography.)

Data as of July 1987

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