2.1 to what extend did the GDR's economy stabilise after 1961 Flashcards
1963 - NES (25 cards)
what does NES stand for?
The New Economic system 1963
name 2 reasons why the NES was launched
- the new found security of the Berlin wall gave the SED the opportunity to adopt and experiment with new policies.
- need for economic reforms that could help with innovation and efficiency- Eirich Apel (1965)
what was the aim of the NES
- gov to retain control of overall economic power but more decision making allowed at lower levels.
what were the positive outcomes of the NES
- introduced profit and by 1965 industrial production had risen by 43%
- focus on incentives
- need for scientific and technological developments.
- encouraged links with industry and universities.
what were the negative outcomes of the NES
- managers didn’t have appropriate financial skills
- difficulty in obtaining necessary resources
- oppositions to NES from those who wanted a communist state- Brezhnev
- people deliberately sabotaged by breaking machinery or taking extended sick leave
- differences in wages led to more arguments and lack of consumer goods to buy.
what does ESS stand for
economic system of socialism 1968-71
what was the reason behind the ESS being introduced
- to be based more on communist ideology with more centralised planning with extension to trade and agriculture as well as industry
- placed more emphasis on developing computer technology
- high quotas
what were the positives of the ESS
- GDR economy grew by 5.7% and GNP rose from 3.5% in 1960-1965 to 5.1% in 1965-70
what were the negatives of the ESS
- desired progression was limited by a lack of resources
- desire to overtake the FRG placed emphasis on industry and not on consumer goods
- changing political climate- Czechoslovakia 1968 led to Brezhnev imposing more hard-line communist policies
what was the name given to the policy of consumer socialism
- unity of social and economic policy
what was the idea behind consumer socialism
- any increase in production would provide the capital needed to improve the social conditions in the GDR such as healthcare , education and housing.
when did nationalisation occur
1972
what was nationalised (why was it abolished)
private and semi private companies
- this sector created oner 11% of the GDR’s production and employed 500,000+ people
- the policy was abolished in 1976 due to the impact of the loss of these enterprises.
what were the positives of consumer socialism
- production grew about 5% every year in the 1970’s up until the 80’s
- nearly every household had a TV and refrigerator
- 85% of population had a washing machine
- stabilised the economy allowing the state to maintain control
what were the negatives of consumer socialism
- resentment at the unavailability of consumer goods were directed towards Delikat and Exquisit shops (gov run with high quality goods designed for elite party members- intershop products were unaffordable for the vast majority of GDR citizens.
- 1982 GDR found it increasingly difficult to secure credit - OPEC prises in 1973 rose oil prices which hurt the GDR as a country with few natural resources- solution was to borrow 2 million DM from FRG in 1983 and 1984.
- the money was placed in banks rather than into industry to convince Western nations that the GDR was a credible investment
- 1982 imports fell by 30% while exports rose by 9.1% - saved fuel was then sold to the west as were many consumer goods.
why were their difficulties getting credit
- 1982 GDR found it increasingly difficult to secure credit - OPEC prises in 1973 rose oil prices which hurt the GDR as a country with few natural resources- solution was to borrow 2 million DM from FRG in 1983 and 1984.
how did the GDR tackle the difficulties of getting credit
- solution was to borrow 2 million DM from FRG in 1983 and 1984.
why was money placed in banks and not invested
- the money was placed in banks rather than into industry to convince Western nations that the GDR was a credible investment
what impact did putting money in banks, and not investing it have on trading with the west?
- 1982 imports fell by 30% while exports rose by 9.1% - saved fuel was then sold to the west as were many consumer goods.
when did the GDR become a member of COMECON
- 1950
how much of the GDR’s trade was with the USSR and Eastern bloc?
- 76% of its trade
describe the GDR’s status in the eastern bloc and why
- became the most influential country with the highest living standards
what did the GDR supply the USSR with
- vital tech at well below market prices.
- electrical engineering at well below market prices.
- 45% of GDR’s exports was to the USSR
what was the GDR’s trade with the USSR not profitable
- USSR was GRR’s largest trading partner but it wasn’t profitable because the products were never bought at real market prices and often paid with natural resources- USSR supplied 90% of GDR iron ore, oil and wood and 80% of its rolled steel and sheet metal.
