ECONOMIC CRISES, STRUCTURAL CHANGE 129
many but also practical errors hampered privatization. These included
the shift of factual GDR state debts to the books of the enterprises that
were to be privatized, as well as cases of corruption and fraud.^101
Additionally, this transformation and the course it took varied greatly
according to the respective structures of the diff erent sectors. Most of the
East German steel production sites, for example, were retained at fi rst.
They also benefi ted—as was also the case in the West in the 1980s—
from extensive public funds that fl owed into large investment projects
within this highly concentrated industry, which were also motivated by
regional political concerns or social policy issues. In contrast, the me-
chanical engineering industry lost an extremely high share of its employ-
ees, despite the fact that it had been one of the GDR’s leading sectors
with a smaller productivity gap. The relatively small average size of the
companies and a fractured ownership structure that dampened public
interest and increased the chances of “raisin-picking” for new owners
largely accounted for this loss. Moreover, the strong focus on exports
proved to be quite a strain because these companies were forced to enter
the global market unprotected; they were also confronted by West Ger-
man competitors who were already under pressure themselves. The net
losses in employment proved to be much lower in the public service and
retail trade sectors as well as in the chemical industry, even though it was
not generally considered to be very modern.^102
Overly optimistic political estimations certainly had something to do
with the East German economy hitting rock bottom as the reunifi cation
boom took a downswing in 1991 and unemployment fi gures skyrocketed.
The simple transfer of Western institutions and the West German cur-
rency onto the existing East German structures had not—as hoped—gen-
erated self-sustaining growth on a broad level. After bottoming out in the
early 1990s, growth rates rebounded quite impressively at fi rst, but they
were heavily dependent on construction activity that soon dropped off
again. Industry employment fi gures fi nally stabilized in the mid-1990s,
but they still remained at a much lower level than in the GDR. In terms
of productivity, the East was not quite able to achieve the same level as
the West because large companies with a focus on innovation were still
underrepresented. This catch-up process further stagnated in the second
half of the 1990s, and, although it gained momentum slowly in the de-
cade that followed, it still has not been completed even today.^103
Lastly, with its transformation into a market economy and its corre-
sponding integration into not only the West German but also the Euro-
pean and global economy, the East underwent structural transformations
almost overnight that had taken decades in the West. Its outdated eco-
nomic structures had hardly any way to protect themselves against the