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The German Democratic Republic, 1949–90

Economic situation in the 1980s

  • 3 things to know
  • Paper 2

Overview

Recall questions on the scale of foreign debt, why the state borrowed, the Schurer report, decaying infrastructure and pollution, and the microelectronics programme.

What you need to know

Answer each one before you reveal it.

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Key term

What economic problem grew in the 1980s?

Key term

How large was the GDR's foreign debt by 1989?

Who and when

Why did the GDR borrow so heavily?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What economic problem grew in the 1980s?

    Model answer

    A rising national debt alongside poor-quality consumer goods.

  2. 2

    How large was the GDR's foreign debt by 1989?

    Model answer

    Around 49 billion Valutamark of gross hard-currency debt by the Schürer report's figure, with debt service consuming much of export earnings.

  3. 3

    Why did the GDR borrow so heavily?

    Model answer

    To fund the consumer subsidies and housing programme that underpinned Honecker's social contract, since the economy could not generate the growth required.

  4. 4

    What was the Schurer report?

    Model answer

    The 1989 internal assessment warning the Politburo that the GDR was effectively insolvent and that avoiding bankruptcy would require cutting living standards sharply.

  5. 5

    What was the state of GDR infrastructure by the 1980s?

    Model answer

    Decaying: crumbling housing in the old towns, obsolete plant, chronic shortages of spare parts, and severe pollution from brown coal and chemicals.

  6. 6

    Why was the GDR's technology falling behind?

    Model answer

    An expensive attempt to develop its own microelectronics absorbed vast investment and still produced chips years behind the West at many times the cost.

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