The study is divided into three parts. The first part analyses and evaluates the relevant literature on this topic. Because of the envisaged membership in the EU, the access to financial support by the EU and the efforts to reach EU-standards in institutional fields, direct investors have much confidence in the future development of Hungary, Poland and the Czech Republic. Nevertheless the CEE-Countries suffer from the burden of the former state controlled socialistic economy. Numerous weaknesses on institutional fields (deficits concerning the enforcement of laws, the fight against corruption a. o.) and an enormous backlog demand in the infrastructure sector remain.
The second part of the study complements the analysis of literature with a survey of majority-owned subsidiaries of German enterprises which are resident in the CEE-Countries. An implemented survey of the Saxony resident majority-owned subsidiaries of foreign investors shows that in comparison to the assessments of various properties of location reveals a more positive ranking for Saxony compared to the CEE-Countries in almost every field. Companies especially emphasise: motivation and qualification of employees, the R&D infrastructure, which was often used, and the support by competent and co-operative public authorities. In addition, foreign subsidiaries praise the short processing time and the reliability of public of investment promotion.
In the last part of the study, a model is used in order to examine, which kind of support system, used in the compared countries, is most suitable to attract investors given the differences in the labour costs, other components of costs and productivity. Whereas investors in Saxony get allowances to investments based on special promotion of Eastgerman regions, the three CEE-Countries primarily rely on favourable tax treatment to attract investors. Under realistic assumptions concerning advantages of labour costs and disadvantages of other components of costs in Hungary, the Czech Republic and Poland, the allowance based system of Saxony is more advantageous than the support systems of the three other countries. The advantage compared to an investment in an underdeveloped region in the Czech Republic is, now ever not significant. The advantage of Saxony increases with the size of investments and the start-up costs of an enterprise formation.
W. Gerstenberger, J. Jungfer, H. Schmalholz: Standortbedingungen in Polen, Tschechien und Ungarn und die Position Sachsens im Standortwettbewerb, ifo Dresden Studie 33, Munich/Dresden.
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