From 1964 to 1969, Fels was a research associate on the staff of the Council of Economic Experts (SVR), which had been established in 1963. From 1966 onwards, he worked there for three to four months a year directly preparing the annual report; the rest of the time, he was an assistant to Giersch at the Saarbrücken Institute for
European Economic Policy.
Kiel years In mid-1969, his teacher Giersch took over as president of the
Institute for the World Economy (IfW), which is part of the University of Kiel. Fels followed him, along with other liberal economists from Saarbrücken. In 1971, he took over as head of the Department of Structure and World Economy there and was appointed deputy president of the institute in 1976. In addition to his work at the IfW, Fels taught as an
Honorary Professor at the
University of Kiel from 1974 to 1985. As one of only a few economists from Germany, Fels also gained international recognition. From 1978 to 1982, Fels was sent by the
Development Ministry as the first German representative to the United Nations Committee for Development Planning (
New York), a panel of 24 experts tasked with alerting the various
UN agencies to weaknesses in the global economy. Since 1981, he was a member of the scientific directorate of the Research Institute of the
German Council on Foreign Relations.
Council of Economic Experts In June 1976, at the age of 37, Fels was appointed to the SVR as successor to
Norbert Kloten as representative of the major economic research institutes., where he played a key role in formulating the supply-side policy concept of the Council of Five Wise Men – together with Armin Gutowski,
Gerhard Scherhorn, Kurt Schmidt (financial expert), Olaf Sievert. The 1976 Annual Report, which became widely known for this reason, advocated a radical change in economic policy. The focus should no longer be on controlling aggregate demand, but rather on the supply side, i.e., the conditions for investment, research and development, innovation, and qualification. The report was also based on the Kiel research findings on economic structural change. The term "Germany as a business location" appeared for the first time, an abbreviation for the problem area of supply-side policy. The oil crisis, the rise in oil prices, the appreciation of the
Deutsche Mark, and increasing imports from new emerging markets had made the structure of the German economy in need of renewal. Added to this was a growing national debt due to economic stimulus programs. While in Germany, broad academic circles and politicians were initially critical of the new concept, the "revolution" took place abroad. In the
United Kingdom,
Margaret Thatcher and in the
United States,
Ronald Reagan initiated a new economic policy based on related concepts, which in the USA was expressed under the new term "
supply-side economics." There is no evidence that the Americans had noticed what the SVR had developed in four annual reports as supply-side economics. The attention that
Thatcherism and
Reagan's new economic policy received worldwide brought the older ideas of the Council of Economic Experts into full focus in Germany in the early 1980s. Milestones of the subsequent rethinking in Germany included, for example, the Lambsdorff Paper,
the change of government in 1982, and the consolidation course of the then
Federal Finance Minister Gerhard Stoltenberg. At the end of February 1982, Fels resigned from the Council of Economic Experts, although the federal government sought to keep him on the committee.
Institute of the German Economy in Cologne In 1983, Gerhard Fels took over from Burghard Freundenfeld as director and member of the executive board of the
Institut der deutschen Wirtschaft (IW) in Cologne. Under Fels's 21 years of leadership, the institute, financed by major companies and associations, earned a reputation for scientific independence. The focus of research and publications was always on the topic of location in all its dimensions. Fels placed great emphasis on studies with a solid theoretical foundation and a precise empirical basis. After the reunification of Germany, Fels was directly or indirectly involved in various positions in the transformation process of the decrepit socialist system into a functioning market economy. Among other things, he became a member of an advisory board to the last GDR
Prime Minister,
Lothar de Maizière, who also sought West German advice during the
negotiations of the State Treaty that led to the introduction of the Deutsche Mark. Parallel to his work at the institute, Fels received an honorary professorship at the
University of Cologne in 1983, where he focused on teaching international economic relations. In 1988, he was appointed to the renowned
Group of Thirty in
Washington, D.C., and from 1991 to 1999 he was a member of the advisory board of the
German Institute for Japanese Studies in
Tokyo, and from 1995 he was chairman. On 1 July 2004, he handed over his position as Director of the German Economic Institute to
Michael Hüther. To mark Fels's retirement, the IfW hosted a scientific symposium on supply-side economic policy in Cologne on 22 June, including a lecture by the President of the
European Central Bank,
Jean-Claude Trichet. == Economic Policy Positions (Excerpt) ==