East Germany, formally the German Democratic Republic (Deutsche Demokratische Republik, DDR), was an Eastern Bloc state during the Cold War period. From 1949 to 1990, it administered the region of Germany that was occupied by Soviet forces at the end of World War II—the Soviet Occupation Zone of the Potsdam Agreement, bounded on the east by the Oder–Neisse line.
The Soviet zone surrounded West Berlin, but did not include it; as a result, West Berlin remained outside the jurisdiction of the GDR.
The German Democratic Republic was established in the Soviet Zone, while the Federal Republic was established in the three western zones. East Germany, which lies culturally in Central Germany, was a satellite state of the Soviet Union. Soviet occupation authorities began transferring administrative responsibility to German communist leaders in 1948, and the GDR began to function as a state on 7 October 1949. Soviet forces, however, remained in the country throughout the Cold War. Until 1989, the GDR was governed by the Socialist Unity Party (SED), though other parties nominally participated in its alliance organisation, the National Front of Democratic Germany.

The economy was centrally planned, and increasingly state-owned. Prices of basic goods and services were set by central government planners, rather than rising and falling through supply and demand. Although the GDR had to pay substantial war reparations to the USSR, it became the most successful economy in the Eastern Bloc. Nonetheless it did not match the economic growth of West Germany. 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.

In 1989, numerous social and political forces in the GDR and abroad led to the fall of the Berlin Wall and the establishment of a government committed to liberalization. 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 was dissolved and Germany was unified on 3 October 1990, becoming a fully sovereign state again.

Geographically, the German Democratic Republic bordered the Baltic Sea to the north; the Polish People’s Republic 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.