Structural policy


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In the 1990s I was on staff of empirica, Gesellschaft fuer Stadt- und Strukturforschung, a German housing and regional economics think tank based in Bonn and Berlin. Both areas are inextricably linked - at the World Bank one of the key center departments staffed by the famous gang of Shlomo Angel, Alain Bertaud, Bertrand Renaud and Larry Hannah was simply called 'urban' - before the bank apparently entirely lost interest in the area and everything got financialized and securitized away into liability side oblivion. As a reminiscence to a time when developing cities and regions was less than an exchangeable production of 'asset classes' and fancy 'PPP' schemes I will gradually post some historic 'urban' work on this page going forward.


1993: Study for Friedrich-Ebert-Stiftung (German socialdemocratic party) on an Economic Development Strategy for East Germany (in German), which had 4 companion pieces on the Laender of Mecklenburg-Vorpommern, Saxony-Anhalt, Thuringia, and Saxony. The substance is about the errors made by the West German managers of reunification in corporate, sectoral and regional policy, which later was summarized very accurately by Hans-Werner and Gerlinde Sinn's book 'Kaltstart'. In particular I attacked at the time the asset stripping and fireselling privatization policy of Treuhandanstalt under Birgit Breuel, which absolutely favored West German takeovers (and later closures) and ensured that East Germany would be unable - to the present day - to develop an own autonomous local corporate sector to speak of. Lothar Spaeth, a fmr conservative party Baden-Wuerttemberg prime minister in charge of developing Jena corporations re-printed the Thuringia piece. His child Jenoptik whose investment in operating assets he subsidized through sales of real estate has become one of the few autonomous East German technology concerns.

Economists at the Sachverstaendigenrat at the time had no concept of Dutch Disease - which as a result of external income shocks implies subsidizing tradeable good producing investment through selling price-inflated non-tradeable good assets (e.g. real estate). I had worked in 1990 with German Development Institute, which hosted excellent corporate sector development experts at the time e.g. on Korea, in Venezuela on Dutch Disease. What we reached ultimately through the East Germany study was a small KfW-sponsored equity support program for East German Mittelstand - too little too late. Perhaps a living Detlev Rohwedder, first head of Treuhandanstalt whose assassination leaves many question marks until today, would have made a difference. See also my comment on the cold-hearted indifference of West German policy makers on the occasion of 20 years fall of the wall in 'Political commentary'.