The state budget in the Free State Saxony will decline in the years to come. This decline is caused by shrinking funds from the European Union and by the reduction of federal fiscal transfers. The period of declining financial resources coincides with a declining and ageing of the population. These developments make it necessary to concentrate the remaining funds on the most efficient projects and to secure the demographic sustainability of projects.
The study identifies those factors that are essential for the locational choice of businesses and households. The crucial location factors for enterprises are identified in a meta analysis of business surveys. Qualified personnel and the quality of public infrastructure are found to be the most important factors for firm location. The factors for the location choice of households are determined by an econometric analysis. The analysis uses land prices to study the households’ willingness to pay for local amenities. The most important factors for Saxon households are found to be the local public transport system and medical services in the municipalities. The concentration of subsidies on the crucial location factors can help to improve Saxony’s position in the competition for businesses and households.
Due to the declining revenues, the overall efficiency of the public sector becomes increasingly important. Therefore, the study also applies a Stochastic Frontier Analysis for the measurement of efficiency of Saxon municipalities.
Ebertz, A., M. Kriese and M. Thum (2008): Bewertung von lokalen Standortfaktoren für Haushalte und Unternehmen in Sachsen – Entwicklung von Indikatoren zur Überprüfung der Demographietauglichkeit von Förderprojekten der Sächsischen Aufbaubank, ifo Dresden Studie 46, München/Dresden.
Kriese, M., "Effizienzanalyse der sächsischen Gemeinden“, in: ifo Dresden berichtet 5/2008, p. 3-13 (Download, PDF, 260 KB).
Ebertz, A., "Die Wohnortwahl privater Haushalte und die Bewertung lokaler Standortfaktoren in den sächsischen Gemeinden“, in: ifo Dresden berichtet 05/2008, p. 14-22 (Download, PDF, 162 KB).
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