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ifo Economists’ Panel: Economists Do Not Expect East German States to Catch up Any Further

Summary:
In the thirtieth year after the fall of the Berlin Wall, German economists no longer believe that East Germany will catch up any further economically. This is the result of the 23rd Economists' Panel of ifo and Frankfurter Allgemeine Zeitung, in which 136 economics professors participated. 69 percent of the respondents answered "No" to the question of whether East Germany would reach West German economic levels within the next few years or decades. 61 percent said there would be no convergence at all in the medium and long term. "It seems to be a vicious circle: Many well-educated young people see no prospects in the East, apart from exceptions like Leipzig, Dresden or Jena, and go to the West," says Niklas Potrafke, Head of the

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In the thirtieth year after the fall of the Berlin Wall, German economists no longer believe that East Germany will catch up any further economically. This is the result of the 23rd Economists' Panel of ifo and Frankfurter Allgemeine Zeitung, in which 136 economics professors participated.

69 percent of the respondents answered "No" to the question of whether East Germany would reach West German economic levels within the next few years or decades. 61 percent said there would be no convergence at all in the medium and long term. "It seems to be a vicious circle: Many well-educated young people see no prospects in the East, apart from exceptions like Leipzig, Dresden or Jena, and go to the West," says Niklas Potrafke, Head of the ifo Center for Public Finance and Political Economy. "Now they are missing in the East, which hampers economic development there, and instead many conurbations are flourishing in the West.

The German government's economic policy after 1990 was assessed negatively by 42 percent of those surveyed, and positively by only 35 percent. 23 percent responded "don't know". When asked whether a state-subsidized battery factory in a structurally weak region would help to achieve additional regional political effects, 55 percent answered "no" and 36 percent "yes".

The economists cited various reasons for the economic divide between East and West, e.g. emigration of qualified workers, a lack of jobs, destruction of industrial networks, different productivity, too few industrial settlements and company headquarters in the East, more early school leavers than in the West, less research and development, lack of export orientation, wrong economic policies after 1990, weaker urban areas. Individual respondents said that the situation in the east was nothing special, because the Ruhr area was also catching up only slowly, the Saarland was still economically weak 60 years after its annexation to the Federal Republic of Germany and even Schleswig-Holstein was far behind Baden-Württemberg.

Clemens Fuest
Clemens Fuest took over from Hans Werner Sinn as chairman of the IFO Institute in April 2016. He is professor at the Faculty of Economics of the University of Munich.

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