Financial Crisis and the Macroeconomies of Germany and Bulgaria - Dissertation Example

Post World War II Germany was an economy in shambles. The country was divided into two – East Germany, a communist state, and West Germany, a democratic state.  East Germany tried to achieve recovery through a centralized, planned economy.  On the other hand, West Germany pursued a social (as contrasted against “socialist”) market economy.  By this is meant that West Germany aimed to build its economy on free-market policies, and at the same time spread the wealth not only for the wealthy but for all sectors of society.

  The German philosophy politico-socio-economic philosophy revolved around the concept of “Ordnung” or “order”, which did not advocate dictatorship, but the establishment of systems of order.  It is a freely chosen kind of order, not the order that is commanded.  This is of course in direct contradiction to the politico-economic system adopted by East Germany, which is communism. German Unification.  In the late 1980s, the Socialist order began to dismantle, which culminated on December 25, 1991, with the self-declared end to the Union of Soviet Socialist Republics (USSR).

  By this time, Germany had already achieved unification; their economies were unified on July 1, 1990.  There were many similarities between the two sides; they both had a highly disciplined and well-trained labor force and were strongly oriented towards exports.  However, the differences are easily seen.  The former German Democratic Republic (GDR) was centrally planned, there was no private property, and has no experience with entrepreneurship.  Also, the former East German system was highly dependent on the economic systems of the Soviet Union and Eastern Europe, which were in the process of being dismantled.

  In the course of assimilation, the equivalent of approximately US$2 trillion was pumped into East Germany by its Western counterpart. (Time, 2009)