2.1 Introduction

Economic relations between Poland and Germany have gained momentum since the reunification of East and West Germany in 1990. Germany is a leading player in the global economy and has the third highest GDP in the world, just behind the United States and Japan. Germany s role in the international division of labour is even greater. In terms of volume of exports it ranks second only to the United States. Yet unlike the United States, Germany usually has high foreign trade surpluses as German goods enjoy prestige and a remarkable reputation for quality among consumers.

Germany is a net contributor to the EU budget, with the largest contribution to the budget coming from that country. Consequently Germany can be seen as the driving force behind European integration in terms of both deepening and enlargement .

After reunification, even though more than DM100 billion was transferred to the five new federal states each year the economy retained its competitiveness and the currency preserved its stability and strength. Despite this, in a bid to deepen European integration Germany strongly supported the plan to introduce a single European currency and 12 EU member countries duly introduced the Euro on 1 January 2002. Germany thus became an even more important economic pillar of united Europe, while continuing to guarantee its own citizens extensive freedoms and a high degree of social welfare. This rare combination of economic growth, high living standards and social harmony has strengthened the image of Germany as one of the most stable and smoothly functioning parliamentary democracies in the modern world. As a result Germany is an attractive partner for economic cooperation, although the German market sets high standards for foreign imports.