🪙1.3 Economic developments 1949-61
How successful was the development of the GDR’s economy in the years 1949-61?
After the war, Germany’s most largest cities were heavily damaged; this was to reduce the
prospects of economic growth in the Eastern zone of Germany due to it containing industrial
areas. As the GDR moved to developed socialism, it centralised economic planning and
concentrated on the development of heavy industry and collectivisation. This meant cuts in
production of consumer goods, social welfare provisions and wage reductions. This
stimulated the 1953 rebellion as the promised New Course didn’t improve living conditions.
● GDR mirrored it economic as well as it ideology based on USSR
● Collectivisation and heavy industry were focused on, but involved cuts to welfare and
reduction to wages as well as new work norms
Describe the USSR’s seizure of reparations after 1945 and its impact on the GDR’s
economy
● End of WW2
- The USSR lost over 20 million lives and had suffered widespread damage to
its industrial infrastructure.
- Steel output (1945) was half that of the late 30s
● Reparations
- WHY? Due to its weak infrastructures, this meant that Stalin wanted high
levels of reparations and was urgent on the needs to rebuild the Soviet
economy
- Allied powers agreed on the sum of $20 billion (H) disagreed on means and
timescale for the payments to be made. But came to a conclusion that each
power could take reparations from their own zone
- Agreed that USSR permitted an additional 10% from western zones in return
for soviet zone delivering food to them
- USSR’S EXTRACTION FROM ZONE: dismantling of factories, transport
infrastructure, payments from actual production within zone + demanded for
costs of Soviet occupation
● Impact - Stripping resources from Soviet Zone to USSR (GREEDY)
- This was to show that Stalin was neither planning for nor expecting Germany
to be permanently divided
1. 1.5k entire industrial plants and half of all East German railway tracks were
taken from Soviet zone into USSR
2. OCCASIONAL PROBLEMS: damage to equipment while being transported to
USSR + difficulties in reassembling complex industrial plants
- Either taking German experts to USSR or leaving actual equipment in
Germany and then appropriating manufactured products
● Impact - Burden on Soviet Zone + effect on economy
- German people saw USSR as liberating them from horrors of Third Teich
- (H) outweighed by falling living standards and maltreatment of those German
employed in the dismantling operations
- USSR announced reparations would cease from January 1st 1954
, Explain how socialist economic planning shaped industrial and agricultural
developments in the GDR
● Ideology
- SED were commited to Soviet economics and planning as it was based on
the Marxist-Leninist ideology
- Marxist ideology believe that the social and economic conditions regarded as
responsible for facism needed to be gone
- Their economic planning where based on Soviet model
● Aims
- To transform GDR into Marxist-Leninist state and ensure nationalisation of
industry and collectivisation of agriculture were being implemented
- To lay foundations of the Centralised Planned Economy based on Stalinist
model of industrialisation
● Actions
- 1950: State Planning Commission was established - to plan and supervise
the implementation of 5YP
● Reasons for why the GDR’s economy were hindered
1. Post war division meant GDR no longer had access to important supplies of
coal and steel from the Ruhr area (part of FRG)
2. Reparations were still taken by USSR (by 1950) which 25% of all industrial
goods produced by GDR
3. Lose in valuable labour to the FRG through migration
● Advantages + disadvantages to socialist economics and planning
Advantages Disadvantages
Government can shape the economy by Emphasis on Quantity>Quality
prioritise policies, the states needs and - Consequence: products may not
its desired outcomes function effectively, waste and
- E.g. a concentration on public produced may suffer due to
transport rather than private cars unsatisfactory outputs
The focus of economic production was Too centralised
rather social than for personal needs - The system is overly controlled
- This meant that social needs like by a central authority and limits
housing or public services were the freedom of individual and
prioritised to ensure basic needs businesses
of population are met rather than - Its impact can reduce innovation
emphasis on consumer goods and incentives to improve
System = inefficient
- Difficult to plan for the long term
needs prior
- Cannot accurately anticipate to
future needs
- Mismatch of supply and demand
❌
Impact
As they focused on heavy industry at expense of consumer goods many
compared to West germany who had higher earning, short working hours and
holidays
How successful was the development of the GDR’s economy in the years 1949-61?
After the war, Germany’s most largest cities were heavily damaged; this was to reduce the
prospects of economic growth in the Eastern zone of Germany due to it containing industrial
areas. As the GDR moved to developed socialism, it centralised economic planning and
concentrated on the development of heavy industry and collectivisation. This meant cuts in
production of consumer goods, social welfare provisions and wage reductions. This
stimulated the 1953 rebellion as the promised New Course didn’t improve living conditions.
● GDR mirrored it economic as well as it ideology based on USSR
● Collectivisation and heavy industry were focused on, but involved cuts to welfare and
reduction to wages as well as new work norms
Describe the USSR’s seizure of reparations after 1945 and its impact on the GDR’s
economy
● End of WW2
- The USSR lost over 20 million lives and had suffered widespread damage to
its industrial infrastructure.
- Steel output (1945) was half that of the late 30s
● Reparations
- WHY? Due to its weak infrastructures, this meant that Stalin wanted high
levels of reparations and was urgent on the needs to rebuild the Soviet
economy
- Allied powers agreed on the sum of $20 billion (H) disagreed on means and
timescale for the payments to be made. But came to a conclusion that each
power could take reparations from their own zone
- Agreed that USSR permitted an additional 10% from western zones in return
for soviet zone delivering food to them
- USSR’S EXTRACTION FROM ZONE: dismantling of factories, transport
infrastructure, payments from actual production within zone + demanded for
costs of Soviet occupation
● Impact - Stripping resources from Soviet Zone to USSR (GREEDY)
- This was to show that Stalin was neither planning for nor expecting Germany
to be permanently divided
1. 1.5k entire industrial plants and half of all East German railway tracks were
taken from Soviet zone into USSR
2. OCCASIONAL PROBLEMS: damage to equipment while being transported to
USSR + difficulties in reassembling complex industrial plants
- Either taking German experts to USSR or leaving actual equipment in
Germany and then appropriating manufactured products
● Impact - Burden on Soviet Zone + effect on economy
- German people saw USSR as liberating them from horrors of Third Teich
- (H) outweighed by falling living standards and maltreatment of those German
employed in the dismantling operations
- USSR announced reparations would cease from January 1st 1954
, Explain how socialist economic planning shaped industrial and agricultural
developments in the GDR
● Ideology
- SED were commited to Soviet economics and planning as it was based on
the Marxist-Leninist ideology
- Marxist ideology believe that the social and economic conditions regarded as
responsible for facism needed to be gone
- Their economic planning where based on Soviet model
● Aims
- To transform GDR into Marxist-Leninist state and ensure nationalisation of
industry and collectivisation of agriculture were being implemented
- To lay foundations of the Centralised Planned Economy based on Stalinist
model of industrialisation
● Actions
- 1950: State Planning Commission was established - to plan and supervise
the implementation of 5YP
● Reasons for why the GDR’s economy were hindered
1. Post war division meant GDR no longer had access to important supplies of
coal and steel from the Ruhr area (part of FRG)
2. Reparations were still taken by USSR (by 1950) which 25% of all industrial
goods produced by GDR
3. Lose in valuable labour to the FRG through migration
● Advantages + disadvantages to socialist economics and planning
Advantages Disadvantages
Government can shape the economy by Emphasis on Quantity>Quality
prioritise policies, the states needs and - Consequence: products may not
its desired outcomes function effectively, waste and
- E.g. a concentration on public produced may suffer due to
transport rather than private cars unsatisfactory outputs
The focus of economic production was Too centralised
rather social than for personal needs - The system is overly controlled
- This meant that social needs like by a central authority and limits
housing or public services were the freedom of individual and
prioritised to ensure basic needs businesses
of population are met rather than - Its impact can reduce innovation
emphasis on consumer goods and incentives to improve
System = inefficient
- Difficult to plan for the long term
needs prior
- Cannot accurately anticipate to
future needs
- Mismatch of supply and demand
❌
Impact
As they focused on heavy industry at expense of consumer goods many
compared to West germany who had higher earning, short working hours and
holidays
