Explaining the GDR's economic strategy

Abstract

The GDR's fundamental economic strategy since 1971, as reflected in but also modified by its response to the “price shocks” of the 1970s and the ensuing credit squeeze of the early 1980s, has been shaped in important measure by the pressures imposed and the opportunities offered by its complex relationship with the German Federal Republic. The direct and indirect constraints resulting from the GDR's status as junior partner in its alliance with the Soviet Union, the terms of the still tenuous accommodation the regime has worked out with its own citizens, and changes and conflicts within the political elite have also influenced the GDR's choices. The shortterm and long-term measures taken in response to the shocks appear to have been surprisingly successful, even though there is evidence that two of the latter–the return to a policy of economic reform “in small steps” and the utilization of the GDR's “West German connection” to restore its creditworthiness and strengthen its access to Western technology–proceeded only in the face of internal and external controversy. The GDR's apparent success in comparison to its East European neighbors must be attributed to a number of factors, only one of which is its special relationship with the Federal Republic.