United for 30 Years — Catching up to West Germany

Visualizing 30 years of economic data between East and West Germany

Source: pixabay

Historical Context

In the aftermath of the second world war, Germany was divided into four occupation zones for each of the four allied forces, namely the Soviet Union, the United States of America, the United Kingdom and France. The capital, Berlin, was equally divided amongst these four.

Why the East started out so much lower

The separation between the West and East could not have been more fundamental and severe. Both parts of Germany were voluntarily or involuntarily heavily influenced by the United States and the Soviet Union, including their respective economic systems.

Source: Sleifer, Jaap (2006). “Chapter 3.1: High Growth of an Underachiever?”. Planning Ahead and Falling Behind: The East German Economy in Comparison with West Germany 1936–2002. p. 50. ISBN 9783050085395 — via Google Books.

The notable case of the state of Berlin

Even though Berlin is counted as an Eastern state within our analysis, it has to be said that this is not an obvious decision and might well be disputed. Berlin was, equally to the rest of Germany, geographically split by the Allies into a western and an eastern part. Therefore Berlin, even though located deep in the east of Germany, was partly under the authority of the western government.

Source: https://en.wikipedia.org/wiki/History_of_Berlin#/media/File:C-54landingattemplehof.jpg
https://theconversation.com/30-years-after-the-berlin-wall-came-down-east-and-west-germany-are-still-divided-126589

Data and Methodology

The GDP per capita figures are taken from the website https://www.deutschlandinzahlen.de, which is a subsidiary of the German Economic Institute.

Overall Trend

Before moving into the cross-sectional analysis, where we look at figures for each state individually, we start with an overall analysis of the economic situation across the entire country. From the chart below we can see Box-plots of all German states in every year.

Over Time and State

After seeing that we find an overall positive trend in GDP for all states, it would be now interesting to see how that development looks specifically each state in more detail. The heat-map below (tutorial for this chart can be found here) shows the development of GDP per Capita over the years.

Inequality Measure Over Time

In order to directly measure inequality, we apply different statistical measures, namely the Lorenz Curve and the Gini Coefficient.

Awakening from a bad dream

The question might be asked why the East had and still has such a difficult time catching up with the West. One might think that thirty years of subsidy payments would help and that the East would benefit of the many sharp minds in all Germany. The sober truth looks different unfortunately and shows how difficult it is for an economy to redo a trend that was initiated through the division of Germany.

Final Note

Looking back on the developments of the last thirty years, the numbers speak a clear language. The relative disparity became significantly lower over time. Looking at the chart below, we can see that in 2019 Eastern Germany had an average GDP per Capita level which represents 75% of the corresponding Western figure. It will probably take a lot longer before the disparity between the East and West completely vanishes. The eastern states were simply unlucky to have fallen into a zone which would turn out to be so damaging economically. It is now up to Germany to show unity and to reunify East and West also economically.

Helping non-profits and NGOs harness the power of their data. data4help.org

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