Structural and Tension-Related Elements in the Subsidization of West Berlin

Analyzes the extent and effects of the Federal Republic of Germany's (FRG's) assistance to West Berlin, considering the actual inflows and outflows and assumed revenue reductions, during 1951-1968. As a [Land] of the FRG, Berlin forms a part of the FRG political economy. FRG support of Berlin's private economy includes tax allowances, debt guarantees, and credit programs. Federal funding is largely determined by structural factors, including demographic features (age and social structure) and political geography (accessibility). This analysis explores the extent to which assistance funds and revenue reductions have been related to current and expected political tension and the extent to which they reflect structural conditions. Findings indicate that expenditures distinctly related to tension have amounted to about 10 percent of the total expenditure of the consolidated public budget and about 25 percent of the net federal funds flowing to Berlin over the years. For 1951-1968, the net subsidy for both structural and tension-related reasons amounted to 21.9 percent of Berlin's gross social product, of which 5.9 percent was tension-related. 49 pp.