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Reconstruction of eastern Germany, 15 years later

Reconstruction of eastern Germany -reunification fifteen years on

On October 3 Germany will celebrate the fifteenth anniversary of reunification - an occasion to look back on what has been achieved in the process of rebuilding the eastern part of the country as well as to reflect on the challenges that lie ahead.

Many of the historical old town areas of eastern German cities, once run down and threatened by decay, have undergone restoration. Transportation and telecommunications infrastructures are among the most modern in the world. More than half a million new companies have been created.

Major progress has been made in bringing the standard of living in eastern Germany up to the same level as in the western part of the country: Disposable income in eastern Germany today is about 83 percent of the average for Germany as a whole.

There are also differences in income levels in various parts of eastern Germany. In addition to the differences to be expected between rural and urban areas, a number of industrial growth centers have developed which, in turn, have spurred the growth of supplier businesses.

Challenges facing the government

A lot has been achieved, but a lot also remains to be done. The German government is focusing on eight areas of activity in this regard:

• Economic development: The objective is to promote the development of competitive economic structures that, in the end, will make eastern Germany independent of financial transfers from the western part of the country.

• Labor market: Average unemployment in eastern Germany continues to be more than twice as high as in the western part of the country. Programs need to be created to provide more employment opportunities for young people, for the long-term unemployed, and for older members of the workforce.

• Promotion of industrial development: Since the end of 1998 efforts in this area have been focused primarily on the manufacturing sector. Under the terms of Solidarity Pact II the financing of these efforts is secure up until the end of the next decade. This corresponds to the time that was needed for similar processes of structural change to be completed in other regions (e.g. Germany's Ruhr region, old industrial regions of the United States, etc.).

• Promotional policy change: In the future it will be important to promote the development of focal areas of competence, strong companies, and attractive conditions in eastern Germany. To this end promotional policy has been shifted away from an "even spread" approach and towards a concentration on specific clusters, networks, and innovative areas of competence.

• Innovation: The federal government has created a number of programs aimed at promoting innovation, e.g. "INNO-WATT" for small and medium-sized companies and "Unternehmen Region" for regional alliances.

• Research and education: The federal government gave the eastern German states 1.96 billion euros for this purpose in 2004. A number of centers for top-level research have been created.

• Highway construction: As of the end of 2004 the federal government had invested around 25 billion euros in road-building projects for eastern Germany. The construction of 70 bypass roads and 110 kilometers of highway have helped to eliminate traffic bottlenecks.

Urban development and housing: A federal government program entitled "Stadtumbau Ost" (Urban Reconstruction East) has helped to make eastern German cities more attractive by providing funding for the protection of architectural monuments and the demolition of abandoned socialist-era apartment buildings.

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