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damaged and these conditions meant that the rate of return for investment was low. It was the combination of these blows to the economy and new socialist economic policies which made the German economy slow to recover. After this turbulence the economy was left in one of its weakest positions since the war. However, by the late 1980s the economy began to show signs of recovery. The late 1980s showed the beginnings of a drop in public debt, a fall in unemployment and increased growth. However, the fall of the Berlin wall in 1989 and a hasty reunification in 1990 put enormous strain on the new unified German economy.

For the first time in history a market economy was combined with a planned economy and it was a turbulent time for both. The unification on July 1st 1990 had no precedent and there were a number of problems created by the sudden transition. The mishandled unification in 1990 has significantly contributed to Germany's current situation of public debt and unemployment. economic woes. At the time of unification there were dramatic differences in living standards, productivity, work ethic and general society between two regions which had been separated for almost three decades.

The reunification placed a significant burden on western Germany, which has contributed billions of dollars in economic aid to eastern Germany since unification. Public debt in West Germany was already high before the unification and has since continued to rise as the west attempts to restructure the east. The aid has had little impact on eastern Germany and has hampered growth in western Germany. There is still a major divide between the strength of the Eastern and Western Economies. Economic Nobel Laurriet Joseph E Stiglitz: "Clearly, Germany faces many difficulties; most economists agree that reunification was mishandled and the burden on the German economy correspondingly excessive."

The theory upon which the German economic unification was based did not turn out to be correct and the error of judgment still causes problems more than a decade later. Prevailing economic theory at the time suggested that any sudden transition from a planned to market economy will suffer an immediate downturn which should be followed by a period of growth. The process of stabilisation, price liberalisation, and privatisation was carried out abruptly in East Germany, as it was in many former soviet territories. After unification, unemployment and public debt rose dramatically due to the structural

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