ABSTRACT
Economic unification of the two Germanies was instituted by the Treaty on German Economic, Monetary and Social Union (GEMSU) of 1 July
1990. Against manifold economic advice, unification has not been generated by allowing for a several-year period of transition during which eastern productivity and wages could have been brought up to western levels.1 Rather, policymakers opposed any gradualist strategy. They decided to effect economic unification in one big leap, to open the borders and to immediately establish a comprehensive market-type economic system in East Germany. Certainly they did well to do so. Unlike Poland, Czechoslovakia or Hungary, where political and cultural borderlines prevent workers from emigrating and will doom them to remain poorly paid for years, East Germany has not had the option of holding millions of skilled craftsmen, technicians and doctors in their jobs at low wages. A nurse in East Berlin, for example, can easily find a hospital nearby in West Berlin which offers much better pay for the same job. Politicians in the West were facing the threat of a mass exodus from the East, which would have destabilized the political and economic order in the former GDR.
