Industrial espionage damages a country’s long-term productivity, study finds

StasiState-sponsored industrial espionage aimed at stealing foreign technical secrets may boost a country’s technological sector in the short run, but ultimately stifles it, according to the first study on the subject. The study is based on over 150,000 declassified documents belonging to the East German Ministry for State Security, known as Stasi. The now-defunct intelligence agency of communist-era East Germany was known for its extensive networks of informants, which focused intensely on acquiring technical secrets from abroad.

The history of industrial and economic espionage by governments is indeed extensive. It includes lucrative efforts by the United States to steal industrial production methods from Europe in the 19th century, and successful attempts by the Soviet Union to steal atomic technology from the American-led Manhattan Project in the 1940s. But there have been no systematic attempts to evaluate the effect of state-sponsored industrial espionage on the entire economy of the sponsoring nation –until now.

This new study –the first of its kind– was carried out by two economists, Erik Meyersson, from the Stockholm School of Economics in Sweden, and the Spain-based Albrecht Glitz of Pompeu Fabra Univeristy in Barcelona. The two researchers describe their preliminary findings in a working paper entitled: “Industrial Espionage and Productivity”, published by the Institute of Labor Economics in Bonn, Germany. Its findings are based on an analysis of nearly 152,000 declassified industrial-espionage-related communiqués sent by Stasi spies to their handlers between 1970 and 1988. The communiqués were examined with reference to their date of authorship and the content-descriptive keywords appended to them by the Stasi.

The report concludes that stealing industrial secrets can boost a nation’s economic activity in the short run. However, in the long run, a nation’s strategic focus on industrial espionage tends to impede homegrown research and development, and ultimately stifles technological productivity on a national scale. This is because “easy access to secrets” from abroad tends to “discourage both state and private investment in research and development”, according to Meyersson and Glitz. That is precisely what happened to East Germany, argues the report. The country’s total factor productivity (TFF –the growth of its output measured in relation to the growth in inputs of labor and capital) rose significantly as a result of its industrial espionage.That was especially noticeable in the digital electronics sector, where the output gap between East and West Germany was narrowed by a fourth. However, that trend was temporary, and East Germany was never able to develop an organic digital-electronics industry. Industrial espionage is like “research and development on cocaine”, professor Meyersson told Science, the magazine of the American Association for the Advancement of Science. “Maybe you can have a little bit of fun with it, but it’s not good for you in the long run”.

Author: Joseph Fitsanakis | Date: 01 August 2017 | Permalink

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Airbus to sue Germany for helping US spy on its operations

By JOSEPH FITSANAKIS | intelNews.orgBND headquarters in Berlin
European conglomerate Airbus has announced it will file a criminal complaint over allegations that German intelligence services collaborated with their American counterparts to spy on the aerospace firm. The impending lawsuit stems from allegations made last week in the German media that Berlin colluded with Washington to carry out industrial espionage in several European countries. The alleged collaboration involved Germany’s Bundesnachrichtendienst, known as BND, and the United States’ National Security Agency. According to German media reports, the two agencies joined forces at the request of the NSA, in order to determine whether European companies were breaking international trade embargoes. For that purpose, the two agencies launched a joint communications interception project that targeted telephone, email and other online exchanges involving a host of governmental and corporate targets in Europe. German newsmagazine Der Spiegel said last week that the BND used its Bad Aibling listening station to spy on, among other targets, the palace of the French president in Paris, the headquarters of the European Commission in Brussels, as well as Airbus, which is headquartered in Toulouse.

A statement by Airbus, which was quoted by the Reuters news agency, said that the company was well aware that large firms competing for international contracts worth hundreds of millions of euros “are often targets of espionage”. However, said the company, the recent case involving the alleged BND-NSA collaboration caused it considerable alarm, “because there are firm reasons for suspicion”. The company added that it did not wish to speculate further and noted that it had communicated with German federal authorities requesting further information on the allegations of corporate espionage. Meanwhile, Germany’s Minister of the Interior, Thomas de Maiziere, who supervises the BND, denied rumors that Berlin had tried to cover up the collaboration between the BND and the NSA, and called for the espionage allegations to be investigated by parliament.

The news comes amidst a rocky period in the bilateral relationship between Germany and the United States. In July of last year, Germany expelled the CIA station chief —essentially the top American spy in the country— from its territory. The unprecedented move was prompted by a series of extraordinary disclosures made by US defector Edward Snowden, concerning extensive American intelligence operations against Germany.

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