The occupation of the Soviets placed heavy burden on East Berlin’s economy but its

economy reestablished rapidly.

In East Berlin, Central Planned Economy (CPE) was based on state-owned enterprises
and capitals.

The major disadvantage of this economic system is the ignorance of the product
quality.

The government made five-year plans and one year plans in order to produce goods
in the most efficient and satisfying way.

During the 50’s and 60’s, East Germany increased significantly in its production due
to collectivization. Consequently, the GDP jumped up and investment took place in
large numbers.

However, during the 70’s, the CPE started to lag behind the technological
development of the western world.
There were so many different products on the marketdue to technological
development, it became too expensive for the CPE system to produce just as many
varieties in good quality.

By the end of the 70’s, it was facing serious debt problems due to oil crisis in 1973.

In the 80’s, the economy was still going downwards, this meant the beginning of an
end to the communism regime in East Berlin.

When the east and the west got reunified in 1990, East Berlin enacted an open
market economy. Goods and services were provided according to the basic market
economy theory: supply and demand.