A leading economist at the Halle Institute for Economic Research (IWH) has cautioned against targeted federal government support specifically for eastern Germany’s economy.
Oliver Holtemöller, Vice-Director of the IWH, argued in an interview with the “Rheinische Post” that economic policy should be driven by objective circumstances rather than geographical location. His comments come as Germany marks the 35th anniversary of reunification.
Holtemöller identified a key challenge hindering further economic convergence: a relative lack of dynamic market services in eastern Germany’s urban agglomerations compared to the western counterparts. He suggested that regional policy efforts within eastern German states should focus on addressing this specific deficiency.
Prioritizing investment in education, research and development and innovation would be crucial, but Holtemöller emphasized that these areas are primarily the responsibility of state and local governments, rather than the federal level.
Despite advocating against geographically-targeted intervention, Holtemöller acknowledged the substantial progress made in the eastern German economy. He highlighted that disposable incomes per capita now stand at over 90 percent of the national average, placing eastern Germany in a favorable position when compared to other European nations.
