East Germany's industrial espionage in the West raised the country's total economic output by 7.4%, according to a new Research Insight from the ROCKWOOL Foundation Berlin (RFBerlin). Value added in manufacturing alone climbed 22.3% as a result of stolen technical know-how — a gain equivalent to 20.2 billion East German marks, or roughly 4.1 billion euros at 2020 prices.

The figures rest on data from 1988, one year before the fall of the Berlin Wall. Economists Albrecht Glitz of RFBerlin and Pompeu Fabra University in Barcelona and Adrian Lerche of the Institute for Employment Research (IAB) in Nuremberg built the estimate from previously inaccessible intelligence archives and newly digitized corporate documents, allowing them to trace stolen information from its Western source to its final recipient inside the East German economy.

The mechanism was measurable at the firm level. A company that obtained one percentage point more information through espionage saw its value added and labor productivity rise by almost one percentage point per year. Firms with better access to intelligence invested more in their capital stock, consumed more intermediate inputs, specialized further in core products, and recorded faster productivity growth. These advantages propagated through supplier and customer networks, amplifying gains across the entire economy.

Glitz puts a per-unit price on the effect: every additional piece of valuable information yielded an estimated annual economic return of around 330,000 euros at 2020 prices, or 1.64 million East German marks. Not all of it paid off, though — the Stasi also supplied information that had no economic use at all.

The strategic payoff, moreover, had limits. "The Stasi's espionage strengthened the GDR's position within the socialist bloc. However, it did not significantly improve its success in Western markets," Glitz says. The stolen knowledge helped domestically, in other words, but could not make East German firms competitive where they had to sell on merit. There was one durable benefit: firms that received valuable intelligence had a better chance of surviving the transition to a market economy after reunification.

The GDR ran one of the world's largest economic espionage programs during the Cold War, systematically harvesting scientific and technical information from Western companies and research institutions. That history reads differently now. "Although our study examines events from the Cold War, the underlying issues remain highly relevant today with regard to export controls, industrial policy, the protection of intellectual property and technological competition," co-author Lerche says.

The parallels for the semiconductor supply chain are direct. After Russia's invasion of Ukraine, Western governments tightened export controls on goods with potential military applications — controls Russia is now trying to circumvent with the help of agents abroad. Separately, Western officials have voiced concerns about Chinese efforts to acquire the technology behind certain lithography machines, the equipment indispensable for producing the most advanced semiconductors and currently manufactured exclusively by ASML of the Netherlands.

"Many governments are currently tightening export controls, scrutinizing foreign investment and strengthening the protection of strategic technologies. Access to cutting-edge knowledge is of great economic importance. That is why debates on this subject have become a central element of international economic policy," Glitz says.

The RFBerlin findings suggest the stakes in those debates are quantifiable: stolen know-how moved the needle on an entire economy by single-digit percentage points. As export-control regimes tighten around lithography and other strategic toolmaking, the East German record indicates that both the defensive measures — and the espionage they invite — will carry measurable commercial weight.