According to a new study by the Mannheim-based economic research institute ZEW, Saxony has surpassed Bavaria as the most attractive federal state for companies. The economists consider Saxony to be particularly well positioned in the factors "labor and human capital", "financing" and "infrastructure". Bavaria was ranked first in the first edition of the study in 2022, but according to the research institute, the quality of its infrastructure and several sub-areas have declined. The study was commissioned by the Family Business Foundation in Munich.
Three western German states came last in the overall ranking of the thirteen federal states: Schleswig-Holstein, Saarland and Rhineland-Palatinate. The biggest leap forward was made by Lower Saxony, which improved from tenth to third place in the state comparison. The three city states were evaluated separately by the ZEW, with Berlin coming in ahead of Hamburg and Bremen.
Effects of German division overcome
In the location ranking, the division of Germany is "no longer recognizable", according to the paper. "Overall, it is noticeable that the wealthy western German states are still well or very well positioned, but are gradually losing points and rankings." It is not only Bavaria that has lost ground: Baden-Württemberg slipped from third to fifth place and Hesse from fourth to seventh place in the midfield.
"The new federal state index provides the encouraging news that some states in the east in particular are setting the course for the future," said Rainer Kirchdörfer, Chairman of the Family Business Foundation. The Munich-based foundation works independently and is not part of the Berlin-based Association of Family Entrepreneurs, from which numerous business representatives distanced themselves in the fall after it announced its willingness to talk to the right-wing populist AfD.
The south performs poorly in childcare
Each of the five categories in the ZEW study comprises several sub-items. For example, "work and human capital" includes the quality of schools, universities and childcare. In the latter respect, Bavaria and Baden-Württemberg perform particularly poorly, ranking twelfth and thirteenth respectively.
In addition to the three factors mentioned above, the researchers also compared two other categories: "Taxes" and "Institutions". The former leader, Bavaria, only came first in "Taxes". This category included the level of trade tax rates, the taxation of real estate and the quality of financial administration. Under the heading "Institutions", the ZEW summarized the efficiency of the administration and the cultural offerings.
Bavaria spends the most money on the future
In an additional analysis of the state budgets, however, Bavaria is still at the top. The economists rated the "future orientation" of the state budgets. Bavaria spends the highest proportion on education, science, research and culture, closely followed by Baden-Württemberg, Saxony-Anhalt, Thuringia and Saxony.
On the other hand, there is expenditure on administration, social affairs or family and youth, which, according to the authors, will yield little or no fruit in the future. According to the study, Rhineland-Palatinate brings up the rear among the thirteen territorial states in this respect as well.
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