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Economic System of Socialism - Coggle Diagram
Economic System of Socialism
Successes
Between 1968 and 1971, economic results were encouraging.
GDR economy grew by an average of 5.7%.
Western estimates of its GNP grew from 3.5% in 1965 to 5.1% in 1970.
Industrial production rose lots especially electronics and light industry, improving supply of consumer goods.
Industrial production rose by 43% from 1958 to 1965.
Quality of labour improved as Berlin Wall reduced emigration to the West, progress in rebuilding areas such as Berlin, Dresden and Leipzig.
Problems of NES/ESS
Difficult to maintain the desired progression in research and development as the GDR did not have the required facilities, experts and financial investment to match the West.
Productivity failed to meet Ulbricht's aim of overtaking the FRG economy.
Domestic growth but no real improvement in GDR's international competitiveness.
Desire to overtake FRG placed too much emphasis on a few sectors and not enough on consumer goods.
This led to shortages in cold winters, making it more unpleasant for GDR citizens.
It was largely ineffective and struggled to continue on.
End of ESS
September 1970 - Ulbricht on holiday, Honecker introduced Politburo resolution to reverse the narrow emphasis on the economy and increase central planning, ending ESS.
Ulbricht's policies may have been an attempt to slow the descent into economic decline rather than to solve the economic problems.
Warsaw Pact invasion of Czechoslovakia in 1968 led Brezhnev to impose centralisation of economy on Eastern Bloc, end of ESS.
By 1970, GDR had replaced Poland as USSR's main trading partner, despite reparations to the Soviets, and without help from USA's Marshall Aid which the FRG needed for its 'economic miracle'.
Implementation
NES was modified and centralisation reintroduced under ESS.
SED justified this as ESS was based more on communist ideology.
Announced in April 1967, more centrally planned, extended to include agriculture and trade as well as industry.