he Free State of Saxony as well as the other eastern German states have shown a positive development in many areas over the past 20 years. In particular economic development, improvement of the environmental situation, construction of infrastructure (e.g. in the areas traffic and transportation, urban development, and research infrastructure) as well as the improvement of the material circumstances of the people have been achieved. At the same time, the goal of equal living condition has not yet been fully achieved. The study focusses on systematically capturing the past progress in the development since the German reunification, uncovering remaining shortcomings and identifying areas for policy action in the next years.
To survey the current situation and the development since the beginning of the 1990s in the Free State of Saxony and the newly formed German states different macroecnomic indicators will be used. Firstly, based on the demographic development and different macroeconomic data, such as the evolution of the gross domestic product, the productivity, or the labor market, the relative position of Saxony within eastern Germany will be determined and compared to the western German level. Subsequently the forecast of the population development will be described, the future economic growth and the change in the public finances will be discussed and the needs for policy action will be identified.
Federal Statistical Office, Statistical Office of the Free State of Saxony, Regional Accounts VGR d L and others
The examination identifies a strong equalization of many economic indicators in the eastern and western German states shortly after the reunification. The convergence process, however, slowed down rather early, thus not leading to a complete equalization even 20 years after the reunification. Especially in the area of welfare indicators, Saxony and eastern Germany have not yet reached western German levels. In the future, the catch up process will be further hampered by the ageing and decling population. This change in the structure of the population also has extensive consequences for the public finances in the eastern German states. There is a need to prepare for decreasing revenues and adapt the expenditures correspondingly.
Arent, Stefan, Alexander Eck, Oskar Krohmer, Robert Lehmann, Wolfgang Nagl, Joachim Ragnitz and Marcel Thum: Wirtschaftliche Entwicklung Sachsens im Ländervergleich: Bestandaufnahme und Perspektiven, ifo Dresden Studie 59, München/Dresden 2011.
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