The Unification of Germany by L. Goldstein

In 1961 the Socialist Unity Party (SED) had evaluated the level of economic achievement differently than had the CP of the Soviet Union. It raised the question as to how new products and new technology could be developed. It was also clear that the old administrative methods were no longer adequate. With a great deal of difficulty and many mistakes, the SED was able to go over from extensive to intensive economic development. New ways of organizing industry were introduces (Kombinate). By the 1960s the GDR had developed to a point where higher rates of investment were possible. Walter Ulbricht could see that the Soviet economy was lagging behind, that as long as the Soviet Union insisted that the products from the GDR remain as they had been, the economic development of the GDR was not possible. Thus he now sought an accommodation with the FRG, seeking in this way to share the high technology of the West. This did not suit the Soviet Union, and Ulbricht was replaced by Erich Honecker. Through a combination of economic and social policies Honecker sought inner political stability. Investment in industry sank as an extensive housing program developed. The high price of raw materials as well as the high interest rates also affected the GDR. From the beginning of the 1980s the economic conditions began to worsen and stagnate.

Even if consumption hardly sunk, there was little economic progress, and people began saying that everything was getting worse. In order to survive one had to have electronics. But the COCOM (Common Market Commission) conditions were sharpened, and while the Soviet Union had the microchips, it would not give them to the GDR for reasons of military security. In other words, without the ability to apply the scientific-technological revolution to its own industry, and not being able to get it from the Soviet Union, the GDR was doomed. A desperate attempt was made to make the chip in the GDR, but it came to Japanese with what their electronic industry could produce.