German Unification and the 'Market Adoption' Hypothesis.

'Market adoption' is often blamed for inducing precipitous decline in East Germany's comparatively inefficient economy. Government transfers and private sector investments contributed toward income and investment equalization between the east and west of Germany. But the price East Germany paid for unification was the transfer out of vast portions of the regional stock of wealth: as productive assets, forests, farms, and property; by the outmigration of the technical work force; and by the liquidation of the regional scientific potential, features which may well limit Eastern Germany's recovering historical losses relative to Western Germany. (c) 1995 Academic Press, Ltd. Copyright 1995 by Oxford University Press.