Cold War espionage added $4.6 billion to East Germany’s economy

No matter what side you were on, espionage was a cornerstone of Cold War political life. But it was also big business. Espionage was so integral to East Germany that on the eve of the Berlin Wall’s collapse, spying on the West was juicing the nation’s economy by nearly 7.5 percent. In the manufacturing sector, industrial espionage boosted value by over 22 percent in 1988 alone—roughly $4.6 billion in 2020 prices.

These and other insights are analyzed in a recent study overseen by policy analysts at the economic think tank, Rockwool Foundation Berlin (RFBerlin). According to the report’s authors, geopolitical history is comparatively much easier to examine when international channels remain largely open and freeflowing. However, this naturally becomes far more difficult during periods of isolation and trade restrictions. As a result, researchers often now turn to periods like the Cold War for insight.

“Although our study examines events from the Cold War, the underlying issues remain highly relevant today,” Adrian Lerche, a study co-author and economist at Germany’s Institute for Employment Research (IAB), explained in a statement.

Lerche and colleagues recently delved into a massive database containing over 180,000 files on scientific and technical information collected from Western nations between 1970 and 1989. The majority of these documents were obtained by informants working for the East German Ministry for State Security, otherwise known as the Stasi. In most instances, records included the exact date of delivery, the informant’s official registration number, an assessment of the information’s usefulness on a 1–5 scale, and even the East German companies who ultimately received the stolen trade secrets. 

Researchers determined that by 1988, a business in East Germany could expect nearly one percent increase in both value and labor productivity for every one percent boost in advances gained through spycraft.

“Every additional piece of valuable information yielded an estimated annual economic return of around 330,000 euros [$374,000 USD] at 2020 prices, or 1.64 million East German marks,” said Albrecht Glitz, a study co-author and economist at Pompeu Fabra University in Barcelona, Spain.

However, there were limits to these benefits.

“The Stasi’s espionage strengthened [East Germany’s] position within the socialist bloc. However, it did not significantly improve its success in Western markets,” Glitz added.

That said, the companies that gained this coveted information had a much better chance of surviving the transition from a state-controlled economy to capitalist markets after reuniting with West Germany in 1989. Taken altogether, the latest insights don’t simply contextualize past events—they can advise countries and companies looking toward the future. Increasingly restrictive export policies and insular worldviews may offer short-term gains, but there is often a cost.

“Access to cutting-edge knowledge is of great economic importance. That is why debates on this subject have become a central element of international economic policy,” said Glitz.