A leading economist has cautioned against targeted federal government support specifically aimed at the eastern German economy, arguing that economic policy should be driven by need, not geographical location.
Oliver Holtemöller, Vice President of the Halle Institute for Economic Research (IWH), made the statement in an interview with the “Rheinische Post” ahead of the 35th German Unity Day. He emphasized that the primary obstacle to continued economic convergence lies in the relatively underdeveloped market services sector within eastern Germany’s urban areas, compared to their western counterparts. Holtemöller suggested that regional state and local governments should focus policy efforts on addressing this issue.
Key areas for improvement, according to the IWH expert, include fostering education, research and development and innovation. He clarified that these are largely matters for the state and municipal levels, rather than the purview of the federal government.
Despite advocating for a shift in approach, Holtemöller acknowledged the significant progress made in bridging the economic gap between eastern and western Germany. He noted that disposable incomes per capita in eastern Germany have reached over 90 percent of the national average, placing the region in a favorable position when compared to other European economies.