A leading German economist is calling for a fundamental shift in Germany’s approach to bridging the economic gap between its eastern and western regions, arguing that the long-held goal of equalization is no longer viable or productive. Reint Gropp, President of the Halle Institute for Economic Research (IWH), voiced his concerns in an interview with “Der Spiegel”, asserting that continued efforts to “equalize East and West” are increasingly futile.
Gropp’s critique targets the persistent narrative surrounding the economic disparities, which he suggests is rooted in an outdated understanding of the situation. He observes that the expectation amongst many East Germans that historical injustices must be remedied through state intervention fosters a cycle of perpetual disappointment. This expectation, continually reinforced and ultimately unmet, contributes to a sense of victimhood that hinders genuine progress.
The economist’s proposal represents a significant departure from established regional policy. Gropp specifically criticizes the allocation of vast sums – potentially up to €10 billion initially earmarked for Intel’s planned Magdeburg chip fabrication facility – towards large-scale, often ill-fated projects. He argues that those resources would be vastly better deployed in strengthening eastern German universities and promoting the growth of startups. Redirecting investment towards research and higher education, he believes, could generate a truly sustainable innovation ecosystem, offering a more promising path towards regional prosperity than chasing diminishing returns in oversized industrial endeavors.
The statement highlights a growing debate within Germany concerning the effectiveness of longstanding regional development programs. Historically, substantial funds have flowed east, aiming to compensate for the economic legacy of East Germany’s socialist past. Gropp’s argument raises crucial questions about whether this approach has ultimately achieved its desired effect, or whether a more strategic, long-term focus on fostering innovation and talent would be a more productive use of public resources, potentially mitigating resentment while simultaneously stimulating organic economic growth in the region. The call for reassessment is likely to fuel further political discussion on the future of eastern German economic policy and the fundamental assumptions underpinning it.