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The article provides an overview of the state of the East German economy after more than ten years of unification. It demonstrates that, contrary to what had been promised in 1990, the situation is far from ‘flourishing landscapes’. We argue that a number of policy mistakes, based in the desire of the then government to maintain electoral support, is responsible for this. In addition, the behaviour of West German labour market participants is held responsible for the dismal record of unemployment in East Germany. Hence, political and distributional conflicts lie at the root of the still present East German problem.
Hefeker et al. (Tue,) studied this question.