The initial flag of East Germany adopted in 1948 was identical to that of West Germany. In 1959, the East German government issued a new version of the flag bearing the national emblem, serving to distinguish East from West.
The economy was centrally planned and increasingly state-owned. Prices of housing, basic goods and services were set by central government planners rather than rising and falling through supply and demand; and were heavily subsidised. Although the GDR had to pay substantial war reparations to the Soviets, it became the most successful economy in the Eastern Bloc. Emigration to the West was a significant problem – as many of the emigrants were well-educated young people, it further weakened the state economically. The government fortified its western borders and, in 1961, built the Berlin Wall. Many people attempting to flee were killed by border guards or booby traps, such as landmines. Several others were imprisoned for many years.
In 1989, numerous social, economic, and political forces in the GDR and abroad led to the fall of the Berlin Wall and the establishment of a government committed to liberalisation. The following year, open elections were held, and international negotiations led to the signing of the Final Settlement treaty on the status and borders of Germany. The GDR dissolved itself, and Germany was reunified on 3 October 1990, becoming a fully sovereign state again. Several of the GDR's leaders, notably its last communist leader Egon Krenz, were prosecuted in reunified Germany for crimes committed during the Cold War.
Geographically, the German Democratic Republic bordered the Baltic Sea to the north; Poland to the east; Czechoslovakia to the southeast and West Germany to the southwest and west. Internally, the GDR also bordered the Soviet sector of Allied-occupied Berlin, known as East Berlin, which was also administered as the state's de facto capital. It also bordered the three sectors occupied by the United States, United Kingdom and France known collectively as West Berlin. The three sectors occupied by the Western nations were sealed off from the rest of the GDR by the Berlin Wall from its construction in 1961 until it was brought down in 1989.
The official name was Deutsche Demokratische Republik (German Democratic Republic), usually abbreviated to DDR. Both terms were used in East Germany, with increasing usage of the abbreviated form, especially since East Germany considered West Germans and West Berliners to be foreigners following the promulgation of its second constitution in 1968. West Germans, the western media and statesmen initially avoided the official name and its abbreviation, instead using terms like Ostzone (Eastern Zone),Sowjetische Besatzungszone (Soviet Occupation Zone; often abbreviated to SBZ), and sogenannte DDR (or "so-called GDR").
The centre of political power in East Berlin was referred to as Pankow (the seat of command of the Soviet forces in East Germany was referred to as Karlshorst). Over time, however, the abbreviation DDR was also increasingly used colloquially by West Germans and West German media.[note 1]
The term Westdeutschland (West Germany), when used by West Germans, was almost always a reference to the geographic region of Western Germany and not to the area within the boundaries of the Federal Republic of Germany. However, this use was not always consistent; for example, West Berliners frequently used the term Westdeutschland to denote the Federal Republic. Before World War II, Ostdeutschland (eastern Germany) was used to describe all the territories east of the Elbe (East Elbia), as reflected in the works of sociologist Max Weber and political theorist Carl Schmitt.