June 25, 2012

The End of the 'German Miracle' Is Coming

Daniel Altman, Foreign Policy

AP Photo

When East and West Germany reunified in 1990, the whole was much greater than the sum of its parts. The East got the West's airtight economic institutions, its culture of precision in manufacturing, and its central position in the global economy. The West got a huge inflow of new workers -- the equivalent of about a quarter of its existing labor force -- and access to an enormous market that had been shut off since World War II. This market wasn't the wealthiest, but it had plenty of room to grow. And though these new workers weren't quite as productive as their counterparts in the West, on average they were more than 50 percent cheaper.

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TAGGED: Eurozone, Germany

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