A leading German economist is challenging the long-held political and economic goal of aligning the economic output of eastern and western Germany, sparking a debate about the future of regional development policy. Reint Gropp, president of the Leibniz Institute for Economic Research Halle, argues in a recent interview with “Der Spiegel” that pursuing this equalization objective has become counterproductive and perpetuates a cycle of disappointment.
Gropp’s assertion comes at a critical juncture, as the German government grapples with persistent disparities in prosperity and industrial development between the formerly communist East and the more established West. He contends that the current discourse surrounding these differences relies on an outdated narrative, fostering a sense of victimhood amongst eastern Germans that fuels unrealistic expectations. This expectation, he warns, is constantly aroused and ultimately unmet, hindering genuine progress.
The economist’s remarks are particularly relevant given the recent controversy surrounding planned investments in eastern Germany. The proposed multi-billion euro investment aimed at attracting Intel to Magdeburg, initially budgeted at up to €10 billion, has become a focal point for critics questioning the effectiveness of large-scale industrial projects. Gropp suggests that the enormous capital earmarked for initiatives like these – many of which have already faltered – would be far better allocated to strengthening the long-term foundations of the eastern German economy. Specifically, he advocates for substantial investment in research institutions and universities, alongside nurturing a vibrant startup ecosystem.
“Instead of chasing individual, often doomed, mega-projects” Gropp argues, “we need to build sustainable innovation capacity”. This shift in strategy, he believes, would move beyond the superficial goal of economic alignment and instead foster genuine competitiveness and resilience in eastern Germany, addressing the root causes of regional disparities-a policy change that will undoubtedly face political headwinds given the entrenched belief in a leveling-up agenda. The debate now centers on whether accepting divergent economic paths and focusing on comparative strengths offers a more realistic and fruitful approach to the future of eastern Germany.
