Study: GDR benefited massively from economic espionage in the West

The GDR benefited significantly from economic espionage in the West, according to a new study. As a result, the country's economic output increased by 7.4 percent, according to an analysis by the Rockwool Foundation Berlin (RFBerlin) available to Reuters on Sunday. The added value of the industry was 22.3 percent higher due to espionage, which corresponds to 20.2 billion Ostmarks or 4.1 billion euros in 2020 prices. All figures are for the year 1988, the year before the fall of the Berlin Wall.

"The Stasi's espionage strengthened the GDR's position within the socialist bloc. However, it did not significantly improve its success in Western markets," said RFBerlin project leader Albrecht Glitz from the Pompeu Fabra University in Barcelona. “And companies that received valuable information then had a better chance of surviving the transition to a market economy after reunification.”

Companies with useful spy information experienced faster productivity growth, according to the research. They also invested more heavily in their capital stock, relied more heavily on intermediate services and specialized more in their core products. These benefits spread through supplier and customer networks, amplifying overall economic gains. Each additional valuable piece of information yielded an estimated annual economic return of around 330,000 euros in 2020 prices, or 1.64 million Ostmarks, Glitz said.

During the Cold War, the GDR reportedly ran one of the world's largest industrial espionage programs, collecting scientific and technical information from companies and research institutions in the West. Using previously inaccessible secret service archives and newly digitized company documents, the authors say they were able to trace espionage information from its source in the West to its final recipient in the East German economy.

According to co-author Adrian Lerche from the Institute for Labor Market and Occupational Research (IAB) in Nuremberg, the findings from the study have a current relevance. “Although our study examines events from the Cold War, the underlying issues remain highly relevant today with regard to export controls, industrial policy, intellectual property protection and technological competition,” said Lerche. In the past, China has repeatedly been accused of partly owing its rise to technological and economic power to industrial espionage and the theft of intellectual property.

“Many governments are currently tightening export controls, scrutinizing foreign investments and increasing protection of strategic technologies,” said Glitz. Access to top knowledge is important economically.

For example, in response to Russia's invasion of Ukraine, the West tightened export controls on goods with possible military applications, which experts say Russia is trying to circumvent with the help of agents abroad. In addition, researchers say China's attempts to obtain the technology for machines that produce cutting-edge semiconductors are a cause for concern. To date, these have only been produced by the Dutch company ASML.