After reunification, there were many economic effects that occurred. First, there were initial obstacles such as the need for restructuring businesses from East Germany. The clarification of ownership rights, originally private property was one of the fundamental keys for capitalism in West Germany, but East Germany would break down the rights of private property. This would create the question too many citizens and the government of who owns what property. There were two solutions for this problem, it was either restitution or compensation of the properties. By 1992, the Property Law was passed which favored compensation over restitution. The purpose of this was to increase investments within Germany, because it would be easier to compensate citizen’s former properties.
Another effect was the renovation of infrastructure in East Germany. Three main things needed renovation: energy, transport, and communications. This needed to be renovated or else it would be problematic for the private business sector. Another concern would be the environmental renovation needed in East Germany. East Germany had many environmental violations such as pollution, this is would result in a large cost for restoring the land into acceptable environmental conditions.
Productivity affected the economy of Germany after reunification because their lack of business production negatively affected the GDP, Gross Domestic Product, would not reach its full potential. Gross Domestic Product means the monetary value that a country produces of finished goods and services within the country’s borders. Before reunification, East Germany productivity was lower in comparison to West Germany. Upon reunification, East Germany only contributed eight percent (8%) of the total GDP of the nation. The productivity in East Germany was weakened greatly because of the high unemployment rate, and the new regulations East German businesses had to follow.
Surprised by the decrease of production, West German authorities began to do large-scale job training for these citizens in order to reduce unemployment. This job training helped the trainee participants find a job or find a better paying job than they had before. There are many other effects that affected the economy of Germany, but these aspects above are the main contributors that affected Germany’s economy after reunification. (The Economics of German Unification).