Old and new challenges ahead the world’s 4th–largest economy and second most popular migration destination

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With 81 million inhabitants, Germany is the most populous member state in the European Union. After the United States, it is the second most popular migration destination in the world.

A great power, Germany has the world’s fourth-largest economy by nominal GDP and as a global leader in several industrial and technological sectors, it is both the world’s third-largest exporter and importer of good. With a high standard of living, it maintains a comprehensive social security and universal health care system, as well as diverse environmental protection laws.

With 7.1% Germany also has the lowest youth unemployment rate of all EU member states. According to the OECD, Germany has one of the highest labour productivity levels in the world.

Germany is recognized for its large portion of specialized small and medium enterprises, globally known and followed as the Mittelstand model. Around 1,000 of these companies are global market leaders in their segment and are labeled as hidden champions.

In terms of natural assets, the country territory takes pride in vast forests, rivers and mountain ranges and 2 millennia of history. Berlin, its capital, is home to thriving art and nightlife scenes, iconic Brandenburg Gate and many sites relating to WWII. Munich is known for its Oktoberfest and cavernous beer halls, including 16th-century Hofbräuhaus. Frankfurt, with its skyscrapers, houses the European Central Bank.

Migration and integration have made the Federal Republic of Germany more diverse than ever before and more cosmopolitan. Some 16.5 million people with a migrant background now live in Germany, or 20.5% of the population. Germany is now second only to the United States in the list of most popular immigration destinations among the OECD countries. However, the latest migration wave brought new challenges to Europe in general and to Germany in particularly, as the overwhelming majority of immigrants set Germany as their final destination.

Getting back to the reunification moment 25 years ago and to the challenges lying ahead it at that time, Janet Schayan reports for mc.deutschland.de that ‘what has been achieved in the 25 years since the first Day of German Unity is quite astounding’.

One of the most visible examples of these achievements is the transport infrastructure linking the cities: 1,900 kilometers new or expanded federal highways run across the five new states and no less than 17 major transport projects have been initiated – nine rail and seven road schemes as well as one inland waterway. Telecommunications upgrade, the steadfast revamping process of many historical buildings and tourism expansion, all represented the assets gained by the East due to unification with the West.

“In fact, tourism has become an important economic factor in eastern Germany: Mecklenburg-Western Pomerania now attracts more summer tourists than any other state with its sandy beaches and chalk cliffs on the Baltic Sea and its countless smaller and larger lakes. Many of the historical cultural monuments between the Baltic coastline and the Ore Mountains have meanwhile been included in UNESCO’s World Heritage list. Tourism is also blossoming thanks to the ecological rejuvenation of eastern Germany,” notes the same author.

The process of getting the economy in eastern Germany on a growth track was by far the greatest challenge of German reunification. It swiftly emerged that economic conditions in the former GDR were far worse than the experts had assumed. Many of the companies there were not competitive in the market and had antiquated equipment – many had to close, and unemployment rose. Gross domestic product (GDP) in eastern Germany has more or less doubled since 1992, and yet GDP per inhabitant in eastern Germany remains a good 30% lower than in western Germany, concedes the Federal Government’s 2014 Annual Report on the Status of German Unity.

“After reunification, an economic structure evolved in eastern Germany that is very strongly influenced by SMEs. This is viewed as a key reason for the lower output levels. In recent years, however, a process of re-industrialisation has commenced, alongside environmental technology, for example, in the chemical industry and in mechanical engineering, in medical technology and in the field of optical technology. This has caused unemployment to fall, although it still remains far higher than in western Germany. Some former state-owned enterprises have now managed to successfully restructure: Jena-Optronik, the successor to VEB Carl Zeiss Jena, now supplies optical systems for space missions. Eisenhüttenstadt was renowned for its steel mills during the GDR era. The once state-owned enterprise is now part of the ArcelorMittal Group and a modern high-tech rolling mill. Key economic hubs in eastern Germany include Leipzig and Dresden, cities that can rely on a long-standing tradition as industrial or trade-fair centres. Demographic change and urbanisation have created challenges for many communities in eastern German because migration from structurally weak regions has been high since 1990”, reads the article in mc.deutschland.de.

However, the Berlin Institute for Population and Development concluded in a recent study that half of all Germans believe there are still more differences between “Ossis” (easterners) and “Wessis” (westerners) than commonalities and there are still many gaps to fill in this respect, starting from the wealth aspect, social welfare, productivity and consumption to education, migration or women rights.

The fact that it was possible to bring the two systems together “is a miracle for which it is hard to find a historical equivalent,” said the institute’s director, Reiner Klingholz, quoted by The Guardian.

“There is no example of merging two states with such vastly different political systems that has worked so smoothly. But this reunification was, and continues to be, far more difficult to achieve than was thought during the exuberance of the reunification celebrations.

“Even if the two parts were only separated for 41 years – that’s less than two generations – the citizens of east and west were socialised in such a different way that in retrospect the idea that integration would be swift was utopian.”

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