Industrial Espionage and Productivity

50 Pages Posted: 19 Jul 2017

See all articles by Albrecht Glitz

Albrecht Glitz

Universitat Pompeu Fabra; IZA Institute of Labor Economics

Erik Gustaf Meyersson

Stockholm School of Economics - Stockholm Institute of Transition Economics (SITE)

Multiple version iconThere are 2 versions of this paper

Date Written: June 21, 2017

Abstract

In this paper, we investigate the economic returns to industrial espionage by linking information from East Germany’s foreign intelligence service to sector-specific gaps in total factor productivity (TFP) between West and East Germany. Based on a dataset that comprises the entire flow of information provided by East German informants over the period 1970-1989, we document a significant narrowing of sectoral West-to-East TFP gaps as a result of East Germany’s industrial espionage. This central finding holds across a wide range of specifications and is robust to the inclusion of several alternative proxies for technology transfer. We further demonstrate that the economic returns to industrial espionage are primarily driven by relatively few high quality pieces of information and particularly strong in sectors that were closer to the West German technological frontier. Based on our findings, we estimate that the average TFP gap between West and East Germany at the end of the Cold War would have been 6.3 percentage points larger had the East not engaged in industrial espionage.

Keywords: education, espionage, productivity, R&D, technology diffusion

JEL Classification: D240, F520, N340, N440, O300, O470, P260

Suggested Citation

Glitz, Albrecht and Meyersson, Erik Gustaf, Industrial Espionage and Productivity (June 21, 2017). CESifo Working Paper Series No. 6525. Available at SSRN: https://ssrn.com/abstract=3003864

Albrecht Glitz (Contact Author)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Erik Gustaf Meyersson

Stockholm School of Economics - Stockholm Institute of Transition Economics (SITE) ( email )

P.O. Box 6501
S-113 83 Stockholm, 11383
Sweden

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