First comparative study between eastern Germany and eastern Europe on factors influencing business and investment location

Berlin, 01 November 2006: Investors make decisions on direct investment based on the characteristics of as well as comparisons of large cities.  The decision for a specific investment location seldom focuses on regions. The significance of urban centres as a focus of economic activity and growth continues to increase. In this respect, the large eastern German cities are facing increasing competition with eastern European cities to distinguish themselves in terms of the crucial factors that investors are looking for.

For this reason, the ten largest eastern German cities – Berlin, Dresden, Erfurt, Gera, Greifswald, Halle, Jena, Leipzig, Potsdam, and Rostock – decided to jointly carry out an objective comparison to ten eastern and central European cities with respect to the crucial factors for business investment. This benchmark study, initiated by Rostock Business, is an objective comparison between eastern German and eastern European cities of location-relevant criteria concerning investments by international and German enterprises. The results speak for themselves. The study showed that eastern Germany possesses many advantages over the selected eastern European cities.

Federal Minister Wolfgang Tiefensee comments: “This study shows that the new (German) federal states have great resources in highly qualified personnel, excellent universities and a good knowledge base in comparison to the other regions of Europe. Of additional importance is the highly efficient, well-developed infrastructure at hand – a very significant factor in the decision for a business location. Here, in eastern Germany, there are excellent conditions for business. We shouldn’t lose sight of this in the face of criticism concerning the high unemployment rate or prevalence of dependencies”.

Andreas Dressler, Director of Global Location & Expansion Services at KPMG further attests to the favourable conditions for business location in large eastern German cities: “These (factors) have influenced many national and international companies in recent years in their decisions to make business investments in large eastern German cities - a fact that has led to positive business development”.
Although the perception of eastern Germany in the media may at times be dominated by clichés, the concrete work of the practitioners of business development is often much different. This is a fact reaffirmed by Michael Sturm, Managing Director of Rostock Business on behalf of the eastern German cities involved in the study: “We all need to reiterate the significance of the eastern German cities as they really are - centres of growth and innovation and as attractive investment locations. And now we have proof.” A further goal for the eastern German cities is also to create and sustain future-oriented development impulses and especially, jobs. This has been done with success in recent years, as the number of newly established business locations shows.

On the whole, eastern Germany fares very positively as a business and investment location. Eastern Europe is clearly on a course to more significant activities; however, its cities do not possess those advantages in terms of conditions for investment location that eastern German cities do. The competition remains stiff, and the benchmark study shows that the eastern European cities are not standing still. They are continually improving the conditions and framework in which they increase in attractiveness for investors.

Download the First comparative study between eastern Germany and eastern Europe on factors for business and investment location as a PDF.