Wolfgang Tiefensee, Germany’s Commissioner for the New Federal States, expressed his pleasure at the results of a study carried out by the Dresden branch of the Munich-based Ifo Institute.
 
The study on economic growth in eastern Germany shows that technology-focused businesses from all over the world value the region's sound infrastructure and excellent research environment.
 
Tiefensee presented the study in Berlin together with Ifo manager Marcel Thum. "We intend to build on these strengths and will step up our targeted overseas promotion activities", said the minister.
 
Sound infrastructure but a need to catch up in the labour market
 
As part of the study, the research team compared eastern Germany with competitor locations in Central and Eastern Europe, and in Asia. Apart from the usual investment data, they looked at the findings of surveys conducted among domestic and foreign investors.
 
Headed by Ifo’s Professor Thum, the team identified twelve locational factors that drive investment decisions. In the international comparison, eastern Germany scored a ‘good’ or ‘very good’ on eight of the twelve factors. These largely involved the legal framework and the available infrastructure. The eastern German states score less well when it comes to regulating the labour market, labour-related costs and the availability of skilled workers.
 
The study highlights the fact that it is largely high technology companies who have opted to use eastern Germany’s science and business clusters. Their presence has had a lasting positive effect on economic growth across the entire eastern German region.
 
Low-paid jobs not the answer
 
The study also contains a set of recommendations on how to build on the advantages offered by existing regional policy and administration and remedy identified weaknesses.
 
But it also stresses that eastern Germany cannot and should not attempt to compete internationally with jobs that pay below a certain wage level. Instead, the eastern German states should concentrate on their infrastructural and research strengths.
 
Tiefensee would thus like to see more targeted acquisition of foreign investment, saying that "although the conditions for investment in eastern German are obviously very, very good, not very many investors are aware of it." He also said that the German government would be stepping up its efforts on education and vocational training in the region to ensure better availability of skilled workers.

Source: The Press and Information Office of the Federal Government