Instruments and Institutions of Industrial Policy at the Regional Level in Germany: The Example of Industrial Defense Conversion
Severe structural change, such as that caused by the contraction of the defense industry since the end of the Cold War, often produces high social costs. These costs include the loss of production and system capacities, skills, and key technologies in individual regions. On the other hand, such capacities and capabilities are very often established in other regions at the same time. Such processes frequently appear to be efficient from the individual company's point of view but seem societally inefficient. The management of structural change, i.e., active preservation as well as modernization of existing economic structures in a region is a form of conversion. However, management of structural change not only occurs infrequently, it may actually result in setbacks in the process of structural change and, consequently, higher social costs, widespread skepticism, disappointment, frustration, and political lethargy toward structural problems. Such a turn of events can be observed on a large scale in the defense industry. The conversion process started in Central and Eastern Europe in the 1980s and was accompanied by high expectations. However, today the strategy of change management and the mere word conversion have become discredited. The sectors where conversion originated are also