Germany and the Euro

West Germany- Economy (1970s)

• The West German economy led toward an extensive social welfare system that has become one of the most expensive in the world.
• The government began to protect and support some sectors and industries.
• It preserved existing industries rather than providing a force for renewal.
• In the 1970s, the state assumed an ever more important role in the economy.

• Growth did not again reach the levels that it had attained in the early years of the Republic.
• There had been a decline in the growth rate since the 1950s, an upturn in unemployment since the 1960s and a gradual increase in inflation.

• Global economic statistics showed that the West German share of total world production had grown from 6.6% in 1965 to 7.9% by 1975 (since the productive capacities of both East Germany and West Germany always exceeded the absorptive capacity of their respective domestic markets).
• Twelve years later, in 1987 it had fallen to 7.4%, largely because of the more rapid growth of Japan and other Asian states.