AThe study aims to show the short- and long-term impacts of the construction of the Berlin wall that it had on West Berlin and its inhabitants. First, the society was frightened and panicked, and the West Berlin economy started to fall down. Nevertheless, in the long-term period the construction of Berlin wall became one of the most important modernization stimuli in the West Berlin's history. In autumn 1961 the politicians started a plan of massive financial support, tax incentives, and founding of research activities including local universities that should have stopped the city's decline. Due to this extensive plan West Berlin overcame the problems connected with the Wall's construction and soon turned into one of the most important research, university, culture, and light industry centers of West Germany. Huge financial inflow enabled West Berlin to play a successful role as the 'lighthouse or show window of capitalism in the communist sea'.