30 years after the Berlin Wall Fall: are regional economic inequalities still based on the West-East divide in Germany?

Abstract

After many years of being labeled as the “Sick man of Europe”,Germany has established itself as a real economic power in Europe in the last years. Today the country is the largest market in Europe with the highest GDP and it stands out for its stable macroeconomic standpoint, its low rate of unemployment and its high volumes of export, which mainly rely on the strength of its innovative industry. However, on the 30th anniversary of the Berlin Wall fall, we investigate if these positive economic results have been achieved by the whole country or if the economic gap between the East and West still dominates and affect regional imbalances within Germany. Scholars agree that, although the undeniable economic progress made in Eastern Germany, the establishment of equal living conditions throughout the federal territory – proclaimed after the collapse of Berlin Wall – has not been reached. Several challenges need still to be faced by East Germany: the fragmented corporate structures and the lack of large companies, the high dependence on transfer from Federal Government, and the weakness of its labor market characterized by lower wages and higher unemployment in comparison with the West. Nevertheless, recent research suggest that different economic development does not always follow the previous inner-German border and that, regional variances emerge also between the south and the north or between the cities and the country.