Restructuring Industry in East Germany

Horst Siebert and Holger Schmieding

Chapter 5 in European Industrial Restructuring in the 1990s, 1992, pp 119-135 from Palgrave Macmillan

Abstract: Abstract Until the peaceful revolution of late 1989 and the changes in the political and economic system enacted thereafter, the population of the GDR had lived in a typical Soviet-type economy.1 Political and economic decision-making was centralized at the top, the major means of production including all firms in industry were owned by the state, a rigid plan guided the allocation of inputs and the distribution of outputs, investible funds were collected by the one-tier system of state banks and — under the control of the planning authorities — channelled to the firms according to rather arbitrary priorities. Furthermore, the fixed prices did not convey any reliable and relevant information about true economic scarcities. To firms, these prices were little more than mere bookkeeping entries.

Keywords: Capital Stock; Limited Liability Company; Industrial Firm; Soft Budget Constraint; Privatization Programme (search for similar items in EconPapers)
Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-12582-1_5

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DOI: 10.1007/978-1-349-12582-1_5

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