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Industrial Espionage and Productivity

Author

Listed:
  • Albrecht Glitz
  • Erik Meyersson

Abstract

In this paper, we investigate the economic returns to industrial espionage. We show that the flow of information provided by East German informants in the West over the period 1970–1989 led to a significant narrowing of sectoral TFP gaps between West and East Germany. These economic returns were primarily driven by relatively few high-quality pieces of information and particularly large in sectors closer to the West German technological frontier. Our findings suggest that the East-to-West German TFP ratio would have been 13.3 percent lower at the end of the Cold War had East Germany not engaged in industrial espionage in the West.

Suggested Citation

  • Albrecht Glitz & Erik Meyersson, 2020. "Industrial Espionage and Productivity," American Economic Review, American Economic Association, vol. 110(4), pages 1055-1103, April.
    • Handle: RePEc:aea:aecrev:v:110:y:2020:i:4:p:1055-1103
    DOI: 10.1257/aer.20171732
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    Cited by:

    1. Ina Ganguli & Megan MacGarvie, 2026. "Science Without Borders? Waxing and Waning Integration in Global Scientific Research and Innovation," NBER Chapters, in: Economics of Science, National Bureau of Economic Research, Inc.
    2. Barrachina, Alex & Forner-Carreras, Teresa, 2022. "Market must be defended: The role of counter-espionage policy in protecting domestic market welfare," Information Economics and Policy, Elsevier, vol. 58(C).
    3. Akcigit, Ufuk & Alp, Harun & Diegmann, André & Serrano-Velarde, Nicolas, 2025. "Committing to grow: Employment targets and firm dynamics," IWH Discussion Papers 17/2023, Halle Institute for Economic Research (IWH), revised 2025.
    4. Ali Sina Önder & Sascha Schweitzer & Olga Tcaci, 2024. "Innovation and Regional Development: The Impact of Patenting on Labor Market Outcomes," Working Papers in Economics & Finance 2024-07, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.
    5. Hipp Ann & Fritsch Michael & Greve Maria & Günther Jutta & Lange Marcel & Liutik Christian & Pfeifer Beate & Shkolnykova Mariia & Wyrwich Michael, 2024. "Comprehensive Patent Data of the German Democratic Republic 1949–1990," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 244(1-2), pages 149-158, February.
    6. Andreas Lichter & Max Löffler & Sebastian Siegloch, 2021. "The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany," Journal of the European Economic Association, European Economic Association, vol. 19(2), pages 741-789.
    7. Dorner, Matthias & Harhoff, Dietmar, 2018. "A novel technology-industry concordance table based on linked inventor-establishment data," Research Policy, Elsevier, vol. 47(4), pages 768-781.
    8. Wang, Wenjie & Zhang, Yichong, 2024. "Wild bootstrap inference for instrumental variables regressions with weak and few clusters," Journal of Econometrics, Elsevier, vol. 241(1).
    9. Dany Bahar & Andreas Hauptmann & Cem Özgüzel & Hillel Rapoport, 2019. "Migration and Post-conflict Reconstruction: The Effect of Returning Refugees on Export Performance in the Former Yugoslavia," Growth Lab Working Papers 149, Harvard's Growth Lab.
    10. Paul Hunermund & Ann Hipp, 2024. "Inventor Mobility After the Fall of the Berlin Wall," Papers 2409.01861, arXiv.org, revised Jan 2025.
    11. Lyubimov, Ivan & Gvozdeva, Margarita & Lysyuk, Maria, 2018. "Towards increased complexity in Russian regions : networks, diversification and growth," BOFIT Discussion Papers 8/2018, Bank of Finland, Institute for Economies in Transition.
    12. Dany Bahar & Andreas Hauptmann & Cem Özgüzel & Hillel Rapoport, 2018. "Let their Knowledge Flow: The Effect of Returning Refugees on Export Performance in the Former Yugoslavia," CESifo Working Paper Series 7371, CESifo.
    13. D'Acunto, Francesco & Schnorpfeil, Philip & Weber, Michael, 2022. "Big brother watches you (even when he's dead): Surveillance and long-run conformity," LawFin Working Paper Series 51, Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin).
    14. Frieling, Titus, 2021. "Innovation under central planning: patenting and productivity in the GDR," LSE Research Online Documents on Economics 112938, London School of Economics and Political Science, LSE Library.
    15. Konysev, Vasilij & Fehrle, Daniel, 2025. "To converge or not to converge: Accounting for the German reunification," VfS Annual Conference 2025 (Cologne): Revival of Industrial Policy 325462, Verein für Socialpolitik / German Economic Association.
    16. repec:iab:iabfme:201707(en is not listed on IDEAS
    17. David Kunst, 2019. "Deskilling among Manufacturing Production Workers," Tinbergen Institute Discussion Papers 19-050/VI, Tinbergen Institute, revised 30 Dec 2020.
    18. Bahar, Dany & Choudhury, Prithwiraj & Rapoport, Hillel, 2020. "Migrant inventors and the technological advantage of nations," Research Policy, Elsevier, vol. 49(9).
    19. Ann Hipp & Udo Ludwig & Jutta Günther, 2021. "Unable to innovate or just bad circumstances? Comparing the innovation system of a state-led and market-based economy," Bremen Papers on Economics & Innovation 2111, University of Bremen, Faculty of Business Studies and Economics.
    20. Cathrin Mohr & Christoph Trebesch, 2025. "Geoeconomics," Annual Review of Economics, Annual Reviews, vol. 17(1), pages 563-587, August.
    21. Ann Hipp & Björn Jindra & Kehinde Medase, 2024. "Overcoming barriers to technology transfer: empirical evidence from the German Democratic Republic," The Journal of Technology Transfer, Springer, vol. 49(5), pages 1787-1821, October.
    22. Ufuk Akcigit & Harun Alp & André Diegmann & Nicolas Serrano-Velarde, 2023. "Committing to Grow: Privatizations and Firm Dynamics in East Germany," Working Papers 685, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    23. Daniel Fehrle & Vasilij Konysev, 2025. "A “Marginal” Tale of Two Germanies: Accounting for the Systemic Divide," Discussion Paper Series 347, Universitaet Augsburg, Institute for Economics.
    24. William Akoto, 2024. "Who spies on whom? Unravelling the puzzle of state-sponsored cyber economic espionage," Journal of Peace Research, Peace Research Institute Oslo, vol. 61(1), pages 59-71, January.
    25. Bergh, Andreas & Bjørnskov, Christian & Kouba, Luděk, 2025. "The growth consequences of socialism," Journal of Comparative Economics, Elsevier, vol. 53(2), pages 609-626.

    More about this item

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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