The Treuhand Privatizations: Buyer Selection, Regional Consequences, and Political Scarring Effects

• Applicant: Dr. Lukas Mergele
• Subject Area: Economic Policy, Applied Economics ; Economic and Social History
• Term: from 2021 to 2022
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 465830511

• Final Report Year: 2023

Final Report Abstract

This research project focused on the mass privatization of East German firms by the Treuhandanstalt agency following German reunification. The project was divided into three modules: the selection of buyers, the political consequences, and the regional economic consequences of the privatization. The principal investigator left academia partway through the project, but significant progress was made in the first two modules. It studied the effect of local firm privatizations and liquidations on election outcomes, finding that the socialist party experienced a revival in areas that underwent privatization. The module on buyer selection involved the digitization and manual extraction of information from the agency's executive board meetings and the tracking of bidders through Treuhand sources and trade registers. The module on regional consequences was prepared, but not completed due to budget constraints and the principal investigator's departure from academia.

Publications

• Privatizations Spark Socialist Backlash: Evidence from East Germany's Transformation. SSRN Electronic Journal (2022).
  Hager, Anselm; Hennicke, Moritz; Krause, Werner & Mergele, Lukas
  
• The big sell: Privatizing East Germany’s economy. Journal of Public Economics, 242, 105291.
  Mergele, Lukas; Hennicke, Moritz & Lubczyk, Moritz