MNE’s Regional Location Choice - A Comparative Perspective on East Germany, the Czech Republic and Poland
Andrea Gauselmann, Philipp Marek, J. P. Angenendt
IWH Discussion Papers,
No. 8,
2011
published in: Empirica
Abstract
The focus of this article is the empirical identification of factors influencing Foreign
Direct Investment (FDI) in transition economies on a regional level (NUTS 2). The
analysis is designed as benchmark between three neighboring post-communist regions, i.e. East Germany, the Czech Republic and Poland. Their different transition paths have not only resulted in economic differences. We can also observe today that the importance of pull factors for FDI varies significantly across the regions. This analysis shows that in comparison with Poland and the Czech Republic, East Germany’s major benefit is its purchasing power, its geographical proximity to West European markets, and its modern infrastructure. Furthermore, the analysis suggests that intra-industry linkages such as specialization and agglomeration economies are relevant factors for the location decision of foreign investors. This result can help to explain the regional divergence of FDI streams in transition economies.
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Investment Grants: Which Requirements Should be Fulfilled?
Mirko Titze, Lutz Schneider
Wirtschaft im Wandel,
No. 11,
2010
Abstract
Since the year 1969 the German government has applied investment grants to improve regional economic development of disadvantaged regions. The support of eligible firms shall enhance its investment activities. Such activities may force a sustainable development of the respective region. One requirement – amongst others – for the grant of this investment support scheme is the firm’s verification of supra-regional sales. The gains resulting from the firms’ export activities lead to additional income for that region, and this stimulates multiplicative (reinforcing) regional income processes. Since the German reunification this instrument has been applied in the new federal states, too. Due to the fact that structural deficits still exist in East Germany investment grants are adopted primarily in the new federal states. Today, some policy decision makers think that the catching-up process of disadvantaged regions is not fast enough. Against this background, the further application of investment grants is discussed controversially. Some criticism tends to the criterion of supra-regional sales. It has been argued that particularly small firms are excluded from this support scheme. However, small firms are considered as key players for regional economic activities. Moreover, firms which are highly integrated in international markets depend on world trade cycles and that might be risky for the respective region. Finally, critics believe that regional actors should be boosted in order to strengthen regional identities in terms of regional buyer-supplier-networks. This article shows that policy decision makers should maintain the criterion of supra-regional sales. Particularly, regions with a loss of inhabitants need gains from supra-regional sales to stabilise their local purchasing power. Otherwise, these regions are strongly dependent on transfer flows stemming from other regions. Beyond that, supra-regional sales indicate the firm’s international competitiveness. Finally, the most important argument for supra-regional sale might be linkages to supra-regional knowledge flows which strongly affect the region’s innovative capabilities.
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Preventing Innovative Cooperations: The Legal Exemptions Unintended Side Effect
Christian Growitsch, Nicole Nulsch, Margarethe Rammerstorfer
European Journal of Law and Economics,
No. 1,
2012
Abstract
In 2004, European competition law had been considerable changed by the introduction of the new Council Regulation No. 1/2003. One of the major renewals was the replacement of the centralized notification system for inter-company cooperations in favor of a so-called legal exemption system. We analyze the implications of this reform and its arising uncertainty on the agreements firms implement, especially on innovative agreements like vertical R&D agreements. By means of a decision theoretic approach, we show that the law’s intention to reduce the incentive to establish illegal cartels will be reached but innovating cooperations might be prevented. To avoid this unintended side effect, fines but not the monitoring activities should be increased.
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Economic Upswing and Vitalization of the Labor Market – Who Gains From the Upswing?
Herbert S. Buscher
Wirtschaft im Wandel,
No. 5,
2008
Abstract
The current situation with respect to the economic development in Germany may be characterized as somewhat suppressed as opposed to euphoric. And this statement holds although the German economy is in an upswing phase since 2005, and the GDP growth rates clearly exceed 2% per annum. The main driving forces of this upswing are mainly from the German exports as well as the domestic investment decisions. Rather underdeveloped compared with the exports and the investment is private consumption. This development is accompanied by positive signals from the German labor market. Declining unemployment figures, increasing regular employment and a smaller number of people in active labor market policy measures are the accompanying positive signals from the labor market. But this in general positive development has not yet reached widespread groups of employees in the sense that their real income has also risen and they thus can dispose of a higher amount of purchasing power. This time lag in the different developments between employment and income may lead to a situation that perceived and actual developments may differ and that actually, there might be a gap between the two. The paper discusses what could be meant with „perceived” development and reaches to the conclusion that actual and perceived developments are not so far away from each other than one might have expected.
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FDI versus exports: Evidence from German banks
Claudia M. Buch, A. Lipponer
Journal of Banking and Finance,
No. 3,
2007
Abstract
We use a new bank-level dataset to study the FDI-versus-exports decision for German banks. We extend the literature on multinational firms in two directions. First, we simultaneously study FDI and the export of cross-border financial services. Second, we test recent theories on multinational firms which show the importance of firm heterogeneity [Helpman, E., Melitz, M.J., Yeaple, S.R., 2004. Export versus FDI. American Economic Review 94 (1), 300–316]. Our results show that FDI and cross-border services are complements rather than substitutes. Heterogeneity of banks has a significant impact on the internationalization decision. More profitable and larger banks are more likely to expand internationally than smaller banks. They have more extensive foreign activities, and they are more likely to engage in FDI in addition to cross-border financial services.
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Sind Haushalte mit Wohneigentum sparsamer als Mieterhaushalte?
Ruth Grunert
IWH Discussion Papers,
No. 171,
2003
Abstract
In this paper examines the data of the income and consumption survey of 1998 with regard to savings and wealth. Households owning their property (owner households) and households renting the property (tenant households) are analysed seperatly and then compared. For further insight these two groups are also devided into East and West German households. In 1998, almost half of the West German and almost a quarter of the East German private households owned property they occupied themselves. The average owner household saves a monthly amount three times as large as the tenant household. The decisive economizing motive for the owner households is servicing its mortgages and loans. However, at the same time, there is the necessity to form reserves for the property maintainance as well as the renovation. In comparison to tenant households, owner households which no longer have to service mortgages or loans, have a higher average rate of saving. The estimate of the saving by means of regression analysis confirms the significant positive influence of the “owner” status on savings. However, in every estimate the houshold’s income proves to be the main influence on savings activity.
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On the stability of Hungarian banks
Werner Gnoth
Wirtschaft im Wandel,
No. 9,
2001
Abstract
The participation of foreign capital, mainly of foreign banks in privatization of Hungarian banks has been decisive for reaching of competitiveness and stability. But the process of transformation of banks is not yet over. Many banks have not yet succeeded to compensate the revenue shortfalls and higher costs by a bigger variety of transactions, especially expanding their off-balance-sheet activities. Merges could also help to solidify stability and international competitiveness of rhe banking system. Analyzing several indicators of Hungarian banking system, we found no sign of crisis. Comparing significant indicators of the banking systems between Hungary, Poland and Czech Republic, we found the Hungarian banking system as having been more successful.
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