IV.

Economy

Despite great damage to both East and West Germany during World War II, both countries had emerged as potent economies by the 1960s. Germany is the third most powerful economy in the world. West Germany became a leading economic world power in the 1970s and 1980s, and East Germany was a leader among Warsaw Pact economies. Reunification has been a shock to the economy of both nations. The West has had to shoulder high taxes to fund improvements in infrastructure, environment, and industry in the East, while many eastern enterprises have collapsed in the face of western competition. Some US$100 billion is being spent annually on the eastern states by the Federal government, achieving an 8 per cent increase in annual economic growth since 1991. In 1994 it was 9 per cent, the highest in the EU. Economic recovery in the east is mainly construction-led. There is a continuing tendency for German companies to set up manufacturing operations abroad, mainly to avoid high production costs at home. Movement towards a single European currency is a major issue facing Germany. Still, Germany remains a powerhouse in the world economy and has one of the highest standards of living in the world. Germany’s GNP (World Bank) in 2004 was US$2,532 billion, equivalent to US$36,810 per capita. In 2006 the Federal budget included around US$836 billion of revenue and US$886 billion of expenditure.

A.

Agriculture, Forestry, and Fishing

Agriculture plays a minor role in the German economy, and the country imports about one third of its food. Farms in western Germany are relatively small—about 75 per cent of the units are made up of an area of 20 hectares (49 acres) or less. These smaller farms are often owned and operated by farmers and their families who support themselves with other jobs. East Germany operated most farms as collectives, and the landholdings are generally larger. The government is in the process of converting the tracts to individual ownership. Only just over 3 per cent of the population works in agriculture.

The best farmland is located in the southern end of the north plains. The nation’s principal crops are sugar beet, potatoes, barley, wheat, oats, and rye. Germany is also a major wine producer. Farmers raise cattle, sheep, pigs, and poultry.

Germany has substantial forestry and fishing industries. Most of the 28 million cu m (989 million cu ft) of timber produced in 1993 came from the great forests of the south-west; more than 70 per cent was coniferous wood. In recent years coniferous forest growth has suffered from acid rain, a result of industrial pollution from the manufacturing centres.

The nation’s leading fishing ports include Bremen, Bremerhaven, and Cuxhaven, on the North Sea, and Kiel, on the Baltic Sea. In 2005 the annual catch totalled some 330,353 tonnes, including almost all marine fish, especially herring, cod, blue mussel, and rainbow trout.

B.

Mining

The mining industry plays a comparatively small role in the German economy. Several minerals, however, are produced in sizeable quantities. Germany is the world’s leading producer of lignite, a low-grade brown coal. Bituminous coal, crude petroleum, iron ore, potash, salt, and natural gas are other important mineral products.

C.

Manufacturing

The economy of Germany is dominated by the manufacturing sector, which produces a great variety of technologically advanced goods, and employs almost 25 per cent of the workforce. The leading types of fabricated goods are transport equipment, machinery, processed food, chemicals, and electronic devices. In 1993 Germany was the world’s third-biggest producer of passenger cars.

Large-scale manufacturing enterprises are concentrated in several areas. The most important industrial area encompasses the state of North Rhine-Westphalia, which includes the steel-producing Ruhr region plus other large manufacturing centres, such as Aachen, Cologne, and Düsseldorf, where chemicals, metal goods, machinery, and motor vehicles are manufactured. Another major industrial region is located around the confluence of the Rhine and Main rivers. Encompassing the cities of Frankfurt, Wiesbaden, Mainz, and Offenbach, it has large factories producing metals, electronic equipment, pharmaceuticals, chemicals, and motor vehicles.

To the south, along the Rhine, is an important industrial area centred on the cities of Mannheim, Ludwigshafen, and Karlsruhe, where chemicals, machinery, and building materials are manufactured. Stuttgart is the hub of a manufacturing region in which motor vehicles, electronic equipment, office machinery, textiles, and optical instruments are produced. Products of the Munich area include aircraft, motor vehicles, clothing, and beer.

Several important industrial regions are located in north-west Germany. These include the Hanover-Brunswick area, where steel, chemicals, and motor vehicles are produced. Another major manufacturing region includes such coastal port cities as Hamburg, Bremen, Kiel, and Wilhelmshaven. Among the products of this region are refined petroleum, processed foods, beer, ships, office machinery, and printed materials. Berlin is also a major producer of electronic equipment.

Out of a total of 67,000 firms in the whole country, about 13,000 companies were operating in East Germany in 1994. However, fewer than one quarter of them were expected to survive in the more competitive economy of a unified Germany. The territory of the former East Germany has a large iron and steel industry, with huge mills at Eisenhüttenstadt and near Berlin. Yearly production of crude steel in East Germany in the late 1980s was about 8.2 million tonnes. A total of 40 million tonnes was produced in 1994 in Germany as a whole. East Germany also produced great amounts of chemicals, such as sulphuric acid, caustic soda, and ammonia. Many chemical plants are in the region of Dessau, Halle, and Leipzig. A large petrochemical complex at Schwedt an der Oder, in the north-east, processes petroleum piped in from Russia, part of the former Union of Soviet Socialist Republics (USSR).

Machinery is produced in numerous cities, especially in the south-west, and the former East Berlin has large factories making electronic equipment. World-leading optical and precision instruments are manufactured in Jena and Görlitz. Rostock and Wismar were the former East Germany’s chief centres of the shipbuilding industry. Textiles are produced in several cities, notably Chemnitz, Cottbus, and Leipzig, and motor vehicles are assembled in Dresden, Eisenach, and Zwickau.

D.

Tourism

The German tourist industry relies on both Germany’s rich history and culture, and its natural beauties, especially the Rhine valley, the Bavarian Alps, and the Jura Mountains. Receipts from tourism amounted to around US$12.3 billion in 1995. Visitor arrivals in the same period numbered around 13.8 million.

E.

Energy

Coal was formerly the major source of electrical power in Germany, but its use decreased in the 1970s and 1980s, although lignite is still a prime source in the east. Petroleum and nuclear power currently supply much of the country’s electricity. In the south, hydroelectric dams draw power from the great rivers. Germany produces some natural gas and oil of its own, but imports most of what it uses. Although the West German government has previously encouraged the development of nuclear power facilities, in 1989 it reversed its position, partly in a delayed response to the 1986 nuclear disaster in Chernobyl in the former USSR. The policy reversal has led to the closing of some facilities and, in the face of widespread public protest, abandonment of plans to build others. In 2001 it was agreed to totally phase out reliance on nuclear power over a 20-year period. Output of electricity in 2003 was 558.1 billion kWh.

F.

Currency and Banking

The basic monetary unit was formerly the deutschmark of 100 pfennig, but as part of Germany’s commitment to the European single currency it adopted Euro notes and coins as from January 1, 2002. As at early 2008, 0.68 Euros equalled US$1.

The bank of issue is the Deutsche Bundesbank, a non-governmental, autonomous institution with its headquarters in Frankfurt. The largest of Germany’s many private commercial banks include the Deutsche Bank A.G., the Dresdner Bank A.G., and the Commerzbank A.G. Many savings banks and credit institutions exist. Following reunification, the country’s largest banks rapidly established a presence in the former East Germany.

The basic unit of currency in East Germany was the East German mark, or ostmark, subdivided into 100 pfennigs. In July 1990 the currencies of East and West Germany were merged. Most East Germans were allowed to redeem up to 4,000 ostmarks for West German marks, or Deutsche marks (DM), at par, and to exchange additional ostmarks for West German currency at a two-for-one ratio. Under the provisions of the Maastricht Treaty and related agreements, the new European Central Bank was established in Frankfurt and inaugurated in 1999.

G.

Commerce and Trade

Germany is a great trading nation. It is the world’s second biggest exporter. In 2004 it paid US$718 billion for its imports, recouping US$912 billion from its exports. From the early 1950s through the 1980s West Germany generally received much more each year from foreign sales than it spent on purchases abroad. East Germany was a major trading nation within the Soviet bloc. After unification, however, Germany’s trade surplus narrowed. The country’s main exports are motor vehicles, machinery, chemicals, iron and steel, and textiles and clothing. Its principal imports include crude and refined petroleum, machinery, food, chemicals, clothing, and motor vehicles. Germany continues to be a leading trade partner both of western nations—including other members of the EU, the United States, Switzerland, and Austria—and of Eastern European countries. In addition to free trade within the EU, most German industrial products are traded freely with member states of the European Free Trade Association (EFTA).

H.

Labour

The workforce in Germany in 2006 comprised about 41 million people. About 40 per cent of the labour force in 1995 was employed in industry. Trade unions comprised about 11 million members, 9.4 million of whom belonged to a union affiliated with the Deutscher Gewerkschaftsbund (German Federation of Trade Unions). Relatively few strikes occur in the country. Some enterprises, notably in the coal and steel industry, operate under a system of co-determination, in which workers and management have roughly equal say in establishing the major policies of their firm. In the past, West Germany had very low unemployment, and East Germany had full employment under its Communist system; in 1996, however, unemployment ran at almost 11 per cent nationwide (15.9 per cent in the east and 9.6 per cent in the west).

I.

Transport

Germany has a highly developed transport system that in 1995 included about 404,337 km (251,255 mi) of roads, with about 11,143 km (6,924 mi) of limited-access motorways (Autobahnen). In 1995, 46.8 million motor vehicles, including 39.9 million passenger cars were in use; there were 546 passenger vehicles for every 1,000 people in 2004. There is no speed limit on the autobahns, but traffic congestion often keeps speeds down. Germany has an excellent railway system, the Deutsche Bahn, which is presently run by the government, with legislation in 1993 enabling eventual privatization. The Deutsche Bahn is an amalgamation, in 1994, of the Deutsche Bundesbahn and the East German Reichsbahn. The railway connects all parts of the country, and is used extensively for both freight and passenger service. Several high-speed inter-city lines are in use or in prospect, including Hamburg to Munich, Frankfurt to Dresden, and Bremen to Hanover, with links to Berlin.

Germany’s large merchant fleet sails from Hamburg, Wilhelmshaven, Bremen, Nordenham, and Emden to the North Sea, and from Lübeck, Wismar, Rostock, and Stralsund to the Baltic. Inland, ships travel the Rhine and other rivers and several canals, including the Mittelland Canal, through the middle of the country, and the Nord-Ostsee Kanal, or Kiel Canal, which links the North Sea and the Baltic. The leading inland port is Duisburg.

The largest international airport in Europe is near Frankfurt, with 12 other international airports, including 3 in Berlin. Germany’s principal airline, Deutsche Lufthansa A.G., which is 36 per cent state-owned, offers extensive domestic and international service.

J.

Communications

Germany has 347 newspapers, with the most important dailies (Das Bild, Süddeutsche Zeitung, Frankfurter Allgemeine Zeitung, Die Welt, Frankfurter Rundschau) counting a combined circulation of 5.7 million in 1996. Germany is a traditional centre of the European publishing trade, and 70,643 books were published there in 1994.

The German telephone network is controlled by three state-owned companies: Deutsche Telekom, Postdienst, and Postbank; partial privatization of Deutsche Telekom commenced in 1996. In 2005 there were some 668 telephones per 1,000 people; 3.71 million mobile phones were in use in 1996.

Germany has numerous public and private radio, television, and cable television networks, dominated by the national broadcasters Deutschlandfunk, RIAS Berlin, and Deutschlandsender Kultur. Colour television broadcasts use the PAL system. Around 78 million radios and 48 million televisions were in use in 2000.