True enough, and there was that sort of potential. It was limited, IMHO, by the fact that East Germany was on the other side of the Cold War. Yugoslavia as a neutral was a relatively secure trading partner, but what western European would want to extend their supply chains into the vulnerable and militarily opposed East?
I don’t think they would do work connected to military interests, but western companies producing washing machines, cars, medicines, consumer electronics etc that wouldn’t be a problem. You could also see East German cartoon studios doing the grunt work for western companies. Of course the Free City of Berlin is not part of NATO or EEC (but likely part of EFTA), so they can transfer critical infrastructure to East Germany.
We could see a similar model as in China with a co-ownership between the East German state and the Western companies, this would result in a transfer of knowledge, in fact East German “companies” did seem to have produced some innovations, but the main problem for them was that the state forced them to focus on good enough. If this innovation happened in connection with outsourced factories, the state would stay out of it, and these innivation would spread to East German consumer goods. Improvements in car production could mean both better cars in East Germany but also a much shorter waiting list to get a car.
As the Free City of Berlin grow (I expect it to reach 5 million people by the 80ties), we will likely also see increased tourism to East Germany, likely with Baltic resorts specializing in tourists from Berlin, this would again result in transfer of money to East Germany, but also force East Germany to raise the standards in their resorts.
