Economy of East Germany

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The economy of the German Democratic Republic (East Germany; GDR, DDR) was a command economy following the model of the Soviet Union based on the principles of Marxism-Leninism. Sharing many characteristics with fellow Comecon member states — the East German economy stood in stark contrast to the social democratic economies of Western Europe. The state established production targets, set prices, and also allocated resources, codifying these decisions in comprehensive plans. The means of production were almost entirely state-owned. The GDR had an above-average standard of living compared to other Eastern Bloc countries or the Soviet Union, and enjoyed favorable duty and tariff terms with the West German market; in 1989, it was estimated that 50 to 60% of its trade was with Western countries. However by the mid-1980s its economy had reached a state of stagnation, contributing to the process of German reunification.

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