Industrial Espionage and Productivity

50 Pages Posted: 19 Jun 2017

See all articles by Albrecht Glitz

Albrecht Glitz

Universitat Pompeu Fabra; Barcelona School of Economics; IPEG

Erik Gustaf Meyersson

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

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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: espionage, productivity, R&D, technology diffusion

JEL Classification: D24, F52, N34, N44, O30, O47, P26

Suggested Citation

Glitz, Albrecht and Meyersson, Erik Gustaf, Industrial Espionage and Productivity. IZA Discussion Paper No. 10816, Available at SSRN: https://ssrn.com/abstract=2988163

Albrecht Glitz (Contact Author)

Universitat Pompeu Fabra ( email )

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

Barcelona School of Economics ( email )

Carrer de Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

IPEG ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

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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