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Dresden Branch
Dresden Branch
The Dresden Branch, established by the Ifo Institute in
1993, conducts empirical economic research that is
focused on the special conditions in the new Länder,
especially in the Free State of Saxony. Ifo Dresden prepares economic analyses that deal with the economic
developments in eastern Germany, especially in
Saxony, and in the recent EU accession countries. It
also offers economic-policy advice and provides a
meeting place for academics, politicians and entrepreneurs. The branch is supported by the Free State of
Saxony and draws on the experience and research
resources of Ifo, its parent institute in Munich, to carry
out its diverse tasks.
The journal ifo Dresden berichtet has been published
since 1994 and appears every two months. In this
journal, Ifo Dresden researchers and external authors
publish their current research findings on the
economic situation in the new Länder for a broad
readership in politics, business and research.The results
of the more comprehensive research projects are
published in the series, ifo Dresden Studien. In 2009, four
volumes in the series were published.
Economic conferences and workshops, such as the working group for the monitoring of economic activity,
regularly take place at Ifo Dresden’s premises. Workshops dealing with topical issues included the 4th workshop on “Macroeconomics and the Business Cycle” in
November 2009 and the 3rd workshop on “Political
Economy” in December 2009. In the series Dresdner
Vorträge zur Wirtschaftspolitik, prominent economists
present the latest findings of their research in economics
and finance. In 2009 four Dresdner Vorträge took place.
The Dresden branch currently works in the following
research areas:
– business-cycle and growth in Saxony and the new
Länder,
– human capital, structural change and the position of
Saxony and the new Länder in the competition for
new businesses,
Ifo journal and book series
Conferences and Ifo
lecture series
Economic Activity and Growth in Saxony and
the New Länder
– labour market and social policy in Saxony and the
new Länder,
Ifo Dresden focuses on business-cycle observation and
forecasts for Saxony and the new Länder as a whole. In
particular, Ifo Dresden prepares a quarterly economic and
employment forecast for Saxony and the new Länder.
– integration of Saxony and the other new Länder
ino the international division of labour (especially
with Central and Eastern Europe) and
– public finance and the promotion of economic
development in Saxony.
The June and December forecasts for eastern
Germany and Saxony are presented for discussion to
the working group for the monitoring of business activity and then at a public press conference. Summary
articles appear in ifo Dresden berichtet.
Under the directorship of Marcel Thum and Joachim
Ragnitz, thirteen economists currently conduct research
at the Branch. Ifo Dresden closely co-operates with the
Dresden University of Technology and the Statistical
Office of the Free State of Saxony. Co-operation
agreements cover in particular visiting fellowships of
researchers and joint activities and presentations.
The Ifo Business Climate indicators for Saxony and
eastern Germany are important economic leading
indicators. The latest status of the indicators is published, with commentary, in the newspaper Sächsische
Zeitung and in Wirtschaftstelegramm, a bulletin of the
Ministry of Economics and Labour in Saxony. The Ifo
Employment Barometer has also been regionalised; this
indicator has been published since January 2008.
In addition to economic research, the Dresden branch
offers extensive services. Ifo Dresden publishes economic-policy analyses in the journal ifo Dresden berichtet and in its book series, ifo Dresden Studien.
Ifo Dresden provides policy-makers, companies and
business federations with information and advice
on current economic-policy issues and organises
workshops and conferences.
Economic activity
forecasting for eastern
Germany and Saxony
In addition to the regular publications on economic
activity in eastern Germany and Saxony, various
contributions on business-cycle research were
published in 2009 in ifo Dresden berichtet.
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Completed doctorates
In this context Gerit Vogt also published his doctoral
thesis “Economic Prognosis in Germany: A contribution
to the Prognosis for the Entire Economic Development at the Federal and Länder Level”, which
appeared in ifo Beiträge zur Wirtschaftsforschung 36,
Ifo Institute for Economic Research, Munich 2009.
This work compares, among other things, the accuracy
of economic prognoses of the Ifo Dresden Branch
with those of other institutions. A study for the
Brandenburg Ministry of Economics provides an overview of the analytical methods for quantifying the
effects of the current financial and economic crisis.
Ifo Dresden analyses these activities annually on the
basis of Ifo surveys, the results of which also provide
information on the innovation behaviour of industry
in Saxony.
In 2009 the work on the “Technology Report for
Saxony in 2009” for the State Ministry of Science and
Art was a focal point of research in this field. To this
end Saxony’s position was determined in co-operation
with the Lower Saxon Institute for Economic Research,
using benchmarking not only in comparison with other
Länder but also in an international context. Detailed
analyses of individual technology areas as well as
innovation and technology locations were used as the
basis for a detailed account of the opportunities and
risks for further technological developments in Saxony.
The results also provide an orientation for further
planning and shaping of the technology and innovation
policy of the state government.
In 2009 various analyses were carried out on the
occasion of the twentieth anniversary of the “fall of the
wall” in eastern Germany. Thus a study of the overall
economic progress made in eastern Germany from
1989 to 2008 was written and articles were published
in various publications (commissioned by the INSM –
Initiative Neue Soziale Marktwirtschaft GmbH Köln,
appeared as ifo Dresden Studie 51, Ifo Institute
for Economic Research, Munich 2009). Furthermore
the Ifo Dresden Branch organised together with
the Academy for Political Education in Tutzing a
conference on the topic “Germany United Fatherland?” from 6 to 8 November in 2009. The goal of
this event was to reappraise the reshaping of eastern
German society, which, initially greeted with euphoria,
turned out to be much more difficult and expensive
than was originally envisioned. Despite the immense
modernising efforts undertaken since 1990 the
income and productivity of eastern Germany is still
considerably lower than in western Germany and also
socially, culturally and politically there are noticeable
differences between the “old” and “new” Länder.
The conference took stock of German unity after
20 years and evaluated it within the context of the
60th anniversary of the Federal Republic of Germany.
Specifically, structural data and developments in Saxon
schools and universities were presented. Research
expenditure and research personnel in publicly
financed areas as well as in the economic sector were
also a central topic of investigation. In addition, private
non-profit research organisations, networks, clusters
and the IC infrastructure of Saxony were analysed and
the goals and promotional measures of the Saxon
research and technology policy examined.
To measure the innovation ability of Saxony, a Saxon
Innovation Index was developed. It is made up of several indicators which allow for an aggregate measurement of the complex multilayered innovation process.
Thus the Free State of Saxony was ranked fifth for the
indicator “Education” in 2009 after the city states and
Baden-Württemberg and thus above the overall
German level. For the indicator “Research” as well as
for the indicator “Businesses”, Saxony only reached
tenth place and was thus below the federal average;
however, it is important to remember that Saxony
as well as the other eastern German Länder have
start-up disadvantages caused by the transformation
after the fall of the wall that can only be compensated
in a long-term process.The overall index for all Länder
is determined for the two years of comparison to
almost 50 percent by the research indicator. The
Human Capital, Structural Change
and the Position of Saxony
and the New Länder in the Competition
for Attracting New Companies
This research monitors and analyses the competitiveness of industry in eastern Germany. Numerous
studies point to the central importance of innovation
for the improvement of a company’s competitiveness.
Ifo Annual Repor t 2009
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Länder have the greatest disparity here. The indicator
“Businesses” comprised 32 percent of the overall
index in 2009. In contrast in 2006 it was 44 percent –
a clear decline. Within three years there was thus a
convergence of the observed variables. In accordance
with the method “Education” is weighted disproportionately low, because the deviation here within
Germany is minimal.
Building and Urban Affairs (represented by the Federal
Office for Building and Regional Planning, Bonn)
was completed. Those technologies, industries and
services which can help preserve natural resources
(e.g., due to lower emission of greenhouse gases)
are grouped under the term cleantech. The research
project contributes to the systematisation of this
branch and to determining the location requirements
that influence (positively or negatively) the further
development of this branch of industry in the
new Länder. The results of the investigation were
published in 2009 in ifo Dresden Studie 49 as well as
in an article in ifo Dresden beichtet.
Innovation Index
for the 16 Federal States
“Innovation Index
for Saxony”
Finally in this research area proposals for the future
economic policy in the eastern German Länder
(illustrated by the example of Saxony-Anhalt)
were developed. The background for this was the
challenges arising from demographic change, increasing
globalisation and not least the increasing financial
weakness of the eastern German Länder budgets.
Proposals to improve the efficiency of economic
policy, in particular promotional policy, were made
and changes in priorities were encouraged. The
recommendations were presented at several events
and discussed in details with representatives from
politics, administration and the economy. A publication
as ifo Dresden Studien is in preparation.
Source: Calculations of the Ifo Institute.
In the overall index Saxony was ranked eighth; in the
adjusted index for territorial states seventh. Thus
Saxony is clearly better positioned than the other
eastern German territorial states. The Saxony
Innovation Index confirms that the process of catching
up economically vis-à-vis the old Länder has been
more successful in Saxony than in the other eastern
German Länder.The overall results of the investigation
were published in December 2009 by the State
Ministry of Science and Culture as the Saxon Technology
Report of 2009. The publication of the results in two
articles in ifo Dresden berichtet is planned for 2010.
Labour Markets and Social Policy in Saxony
and the New Länder
Another focal point of study at the Dresden Branch
is the labour market and social policy in Saxony
and the new Länder. Particular emphasis is placed on
the problem of unemployment and the effect of labour
policy measures. In this connection the Dresden
Branch reports regularly in its publication series ifo
Dresden berichtet about the developments on the
labour market in Saxony and eastern Germany and
evaluates to this end the statistics of the Federal
Employment Agency. An efficiency analysis was carried
out for pre-school care in Saxony, the results of
which will be published in the series Ifo Working Papers
in 2010.
In addition, as part of the focus on “Human Capital,
Structural Change and the Position of Saxony and the
New Länder in Competing to Attract New
Companies” the analysis of “Cleantech in Eastern
Germany: Appraisal and Development Perspectives”
commissioned by the Federal Ministry of Transport,
Additionally, in connection with the DFG programme
“Institutional Shaping of Federal Systems: Theory
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Ifo Annual Repor t 2009
Dresden Branch
and Empirical Knowledge”, the Ifo Dresden Branch
organised a two-day workshop:“Social Infrastructure in
Federal Systems” together with the Competence
Centre for Public Finance (CEPE) of the TU Dresden
on 26 and 27 June 2009. Theoretical and empirical
studies were presented here on the topics childcare,
care of the aged and the health care industry in
federal systems. Central issues that were investigated
were, for example, efficiency, public vs. private financing
and the distribution of federal tasks.
Demographic change will also limit and change the
leeway for expenditure in the budgets of other eastern
German Länder. In order to estimate the need to adapt
financial policy, researchers of the Ifo branch together
with Helmut Seitz (†), TU Dresden and research
professor at Ifo Dresden, have investigated at the state
level the sensitivity of public revenue to demographic
change for Mecklenburg–West Pommerania.
In connection with this research focal point the Ifo
Dresden Branch organised together with the TU
Dresden and the Scientific Centre Berlin (WZB) a
conference on 7 May 2009 on the “Evaluation of the
Results of the Federalism Reform Commission II”,
which was supported financially by the Fritz Thyssen
Foundation.The results of this conference were published in an article in ifo Dresden berichtet; a documentation of the contribution will appear in the journal
German Economic Review.
Integration of Saxony and East Germany in
the International Division of Labour
In 2009 the focal point of the Ifo Dresden Branch in this
research area was primarily on the continued study of
Saxony in the Ifo Industry Reports.This was due on the
one hand to a lack of personnel in this research unit and
on the other to the relatively large scope of research
activities of the Ifo Branch in other areas.
Public Finance and the Promotion of
Economic Development in Saxony
In 2009, in this area of research, a greater emphasis
was placed on analyses of Saxony’s public finance
in relationship to the demographic development,
especially in light of the financial crisis of 2008/2009.
Saxony's public finance
in the light of the financial
crisis
Ifo Annual Repor t 2009
Thus in two studies the mid-term prospects for public
revenue in Saxony at the state and municipal level – with
particular consideration of the expected revenue losses
due to the financial crisis (“Effects and Approaches for
Preparing Municipalities for Demographic Change in the
Free State of Saxony” – commissioned by the Saxon
Minister-President’s Office and “Long-term Forecast for
the Revenue Development of the State Budget of
Saxony until 2025” – commissioned by the Saxony
Ministry of Finance).The decline in the population alone
will lead to significant revenue losses in Saxony’s budget
until 2020.At the same time the funds from the Solidarity
Pact II will fall, significant lag in the adjustment of variable
costs will occur and more debt will be contracted, in
particular as a result of civil servants pensions, unless
countermeasures are undertaken. At the municipal level
reduced revenues are also to be expected as a result of
the close connection between state and municipalities
(regulated by the law of fiscal equalisation for Saxony).
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Dresden Branch
Projects Completed in 2009
Nevertheless, scientifically-based studies about the
existing cleantech sector and analyses of its medium
and long-term potential are lacking to this date. The
present examination remedies this deficit by collecting
information and conducting respective structure and
market analyses.
Cutting-edge Field Cleantech
J. Ragnitz, H. Schmalholz, J.Wackerbauer for the Federal
Ministry of Transport, Building and Urban Affairs,
represented by the Federal Office for Building and
Regional Planning, Bonn, June 2008 to February 2009,
publication in: ifo Dresden Studie 49, Ifo Institute for
Economic Research, Munich 2009, and ifo Dresden
berichtet 16(3), 2009.
Saxony ranked seventh
Overview of Economic Progress in the
Eastern Germany States 1989 – 2008
J. Ragnitz, B. Schirwitz, S. Scharfe für die INSM – Initiative
Neue Soziale Marktwirtschaft GmbH, Cologne, January
2009 to July 2009, published in ifo Dresden Studie 51,
Ifo Institute for Economic Research, Munich 2009.
Given the ongoing discussion about potential means
to absorb the effects caused by climate change, the
production and application of goods and services for
environmental and climate protection is increasingly
becoming a focus of economic activity. Those technologies, industries and services which can help to
preserve natural resources (e.g. due to lower emission
of greenhouse gases) are summed up under the term
cleantech.
The focus of the project was placed on the progress
made since reunification in eastern Germany, which
was measured on the basis of a comparison between
the economic situation in eastern Germany in 2008
and the starting point in the GDR in 1989.
The two different economic systems of this study
are diametrically opposed: the centrally controlled economy of the former GDR and the free market system.
The standard monetary measures used in economic
comparisons can only be applied to a limited degree in
this study as a result of the two systems, the currency
reform of 1990 and the different methods used to
gather statistics. For this reason the study drew
primarily on “real economic” quantities. The results
show the fundamental importance of a free market
policy for the success of “rebuilding the east”. With
German reunification and the introduction of a free
market economy, the people in eastern Germany not
only regained the freedom that they were deprived
of but also their living conditions have improved
enormously in comparison to 1989. A set of indicators
were chosen that facilitate a description of living
conditions in the GDR and in eastern Germany today.
In an overall view of the positive and negatives aspects
of economic and social developments since 1989, the
positive clearly dominate so that German unification,
despite continued problems, can be viewed as a
success.
Eastern Germany’s Share of Employment
in the Photovoltaic Industry and in the Total Labour
Force in Germany in 2007
Source: EuPD research. BA (status: 30 June 2007), Ifo Institute.
There are already important clusters of cleantech
industries (e.g. solar and wind energy) in the new
federal states of Germany. In part, these clusters
comprise every step of the value chain from research
and development, production of assets down to
the final use, for example in power generation.
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Preparing Saxon Municipalities for
Demographic Change – Policy Options
A. Montén, J. Ragnitz, M. Thater, M. Thum, November
2008 to February 2009, published in ifo Dresden
berichtet 16(5), 2009.
Issuing Documents of Compliance for Stateaided Employment
S. Engelmann, B. Schirwitz, M. Thum for the Saxon
State Ministry for Economic Affairs and Labour, July
2008 until January 2009, published in ifo Dresden Studie
47, Ifo Institute for Economic Research, Munich 2009,
and ifo Dresden berichtet 16(2), 2009.
Demographic change has considerable consequences for
the revenue and expenditure sides of the municipal
budgets in Saxony. The population in the Saxon regions
will develop quite heterogeneously.There will be regions
with strong population declines as well as those whose
population remains nearly constant. In order to capture
in detail the consequences of demographic change,
a very small-scale analysis is necessary. The objective of
the project was to provide an estimate of the revenue
decline as well as the resulting adjustment requirements
and potentials at the municipal level in Saxony.
State-aided employment is considered if, in case of
unemployment, integration into regular jobs fails due
to regional labour market conditions or individual
characteristics of the unemployed. For many stateaided employment measures, legislation requires
that these must be additional, for the public benefit,
and must not have an impact on businesses. An
analysis of these criteria shows that their simultaneous
fulfilment is not trivial and that – due to imperfect
information – their practical verification is normally
rather inadequate. The study examined what
pragmatic procedures might help the local decisionmakers – in particular the job centres – to ensure
that state-aided employment measures fulfil
these requirements. Emphasis was put on the adoption
of documents of compliance before labour market
policies are put in place, which is common in Saxony.
In comprehensive interviews with job centres, issuers
of documents of compliance, regional branches of the
Federal Employment Office and the respective federal
ministries, the wide array of testing mechanisms
that has been developed in practice as a result of
the decentralisation of decision-making power for
employment measures is captured in detail for the first
time.
On the basis of municipal fiscal equalization the future
revenues of the Saxon municipalities were projected
until 2020. Building on these results, light was shed on
the expenditure side of the municipalities’ budgets.
With the help of an econometric model, the demand
for public services dependent, among other things, on
the size of the population was estimated. The information so gained will show how individual municipality
expenditures may be adjusted to the size of the
population or whether there are fixed costs of public
services that may prevent an adjustment to demographic change. A final analysis will show for individual
municipalities whether they produce their present
public services efficiently and which (short-term)
savings may be identified in addition. The results
confirm that state and municipal revenues can be
reduced; this reduction, at least at the municipal level
will, however, not be as great as expected.
Adaptation of public
services with unchanged
distribution quality
Ifo Annual Repor t 2009
Consequences of Demographic Change for
Expenditure Patterns in Public Finances
J. Ragnitz, H. Seitz (†) for the Ministry of Finance of the
Federal State of Mecklenburg–West Pommerania,
August 2008 to April 2009, published in ifo Dresden
Studie 48, Ifo Institute for Economic Research, Munich
2009.
All in all the individual municipalities will be able to adapt
very well to sinking revenues and the change in the
population structure. Especially for smaller municipalities
it will be possible to adapt their expenditures to the
changing population and to take advantage of disproportionately strong savings in their public services.The shortterm activation of efficiency reserves and the midto long-term adjustment of municipal expenditure
to demographic change will require, however, that there
is an attendant willingness to adapt in the municipalities.
Demographic change enforces considerable expenditure cuts at the level of the states: Firstly, public
revenues are likely to decline in coming years, due
to population-based state fiscal equalisation, and
secondly, regrouping in the budgets will be necessary in
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Dresden Branch
order to be able to take explicit account of the needs
of individual age cohorts. The project estimated the
demographic sensitivity of public expenditures at the
level of individual expenditure classes. Age structure
matrices were estimated for the public expenditures
(and revenues) that are to show the extent to which
changes in the population structure affect the demand
for public services. Corresponding adjustments of
the provision of public services are possible without
necessarily causing a deterioration of the service
quality. The stock of personnel in individual administrative areas to accomplish these tasks was examined.
Long-term Forecasts of the Revenue
Development of the Free State of Saxony
until 2025
J. Steinbrecher, C. Thater, M. Thum for the Ministry of
Finance in Saxony, July 2009 to September 2009,
published in ifo Dresden berichtet 17(1), 2010.
To shape Saxon state policy in a sustainable manner
and to provide more transparency for current policy
decisions, this project provides a continuation of the
revenue development forecast for the Free State of
Saxony until 2025. Especially in the current economic
and financial crisis, this topic is of particular importance. In addition all the eastern German Länder – in
comparison to western Germany – face the problem
of a dramatic reduction in population. This has led
to considerably lower revenues as a result of the
federal fiscal equalisation scheme. Moreover, the
transfer payments for eastern Germany will be
reduced as of 2019. These three factors will lead to
reduced revenue for Saxony. The aim of the project is
thus to estimate the extent of the decline and to
formulate recommendations for the fiscal policy in the
Free State of Saxony.
The findings to date show that it is certainly possible to
make considerable cuts in spending in the majority of
expenditure areas of the state of Mecklenburg–West
Pommerania. It may be assumed that this also applies
to other federal states.
Technology Report for Saxony 2009
J. Ragnitz, H. Schmalholz in co-operation with B.
Gehrke, H. Legler and U. Schasse, NIW Hannover, for
the Saxon State Ministry of Economics and Labour,
Dresden, September 2008 to November 2009, published in Staatsministerium für Wissenschaft und Kultur,
Sächsischer Technologiebericht 2009, Dresden 2009, and
a summary in ifo Dresden berichtet 17(1), 2010.
To forecast the revenue of the state budget in Saxony
until 2025, revenue was first divided into its individual
components. These components were updated for the
future by means of plausible assumptions and under consideration of legal regulations. The revenue calculated in
this manner was then subject to a sensitivity analysis in
order to quantify the importance of the assumptions.
This is necessary as events that are not anticipated in a
long forecast period of 16 years can have a considerable
influence on revenue development.
The Technology Report for Saxony 2009 aims at
portraying the innovation environment in Saxony
as well as its potential and framework conditions.
By means of benchmarking, Saxony’s position within
Germany as well as in an international context is
portrayed. Detailed analyses of individual technology
fields as well as the innovation environment and the
location as a whole form the foundation for a SWOT
analysis that provides orientation assistance for
Saxony’s technology and innovation policies in order
to derive possible development strategies for the
innovation capacity and technological performance
of Saxony. The recommendations for policy action are
discussed against the background of global scenarios,
such as resource consumption and technological
competition as well as scenarios specific to Saxony,
such as demographic developments.
Forecasts of the state
budget of Saxony
It was determined that revenues in Saxony would
decrease by approximately one quarter in the projected
time period. The reasons for this dramatic decline in
tax revenues are the current economic and financial
crisis as well as the decline in federal supplementary
appropriations. Whereas the former follows a preset path and thus can be taken into account in budget
planning at an early state, the further development of the
economy and thus tax revenue is uncertain.That is why
it will be necessary to update this long-term projection
at regular intervals using the most recent tax estimates.
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Ifo Annual Repor t 2009
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Revenue Components of the Free State of Saxony
up to 2025
As to be expected, the use of analytical methods
to investigate the effects of the financial crises on the
economy in Brandenburg is often determined by the
availability of suitable data. The existing deterministic
and statistical-econometric approaches rely on the
input of meaningful, high-quality indicators or even on
time-series with certain minimum lengths. However, in
spite of their limitations, official (time-series) statistics,
also in combination, are important in such analyses
and might be used to generate additional short-term
information and close data gaps. Additionally, the use
of alternative data sources – often in combination
with official statistics – can complement the findings.
An assessment of these data must, however, include a
cost-benefit analysis.The study provides first important
findings on these various questions.
Source: Calculation and presentation of the Ifo Institute.
Economic Policy: Dialogue in SaxonyAnhalt
S. Arent, J. Steinbrecher, J. Ragnitz, B. Ziegenbalg for the
Investitionsbank Sachsen-Anhalt, August 2009 to
December 2009.
Study on Methods for Analysing the Effects of
the International Financial and Economic
Crisis on the Economy in Brandenburg
S. Arent, W. Nierhaus, B. Schirwitz, J. Ragnitz, G. Vogt,
B. Ziegenbalg for the Ministry of Economics in
Brandenburg, October 2009 to December 2009.
Testing forecasting methods
The eastern German Länder will be facing several
challenges in the near future. Demographic change
will lead to an increasing shortage of skilled workers in
industry. Due to the reduction of the Solidarity Pact II
and a decline in EU Structural Funds, there will
also be a significant decrease in the revenue of
public authorities. Furthermore, the challenges of
globalisation may lead to the transfer of German
businesses to other countries. Against this backdrop
it is necessary for politicians to initiate appropriate
countermeasures. This project focuses on developing
a medium-term economic policy strategy for SaxonyAnhalt. At the centre are measures that affect location
policy, especially educational policy, and recommendations for increasing the efficiency of incentive policies.
Despite less industrialisation and lower exports, the
eastern German Länder were also hit by the global
financial crisis. Its regions, industries and firms have been
affected by the recession differently, however, as they also
differ in terms of structure, international integration and
adaptation strategies.To implement suitable instruments of
economic policy to support the economy in coping with
the crisis, accurate and detailed information on current
developments are needed. Due to several limitations,
official statistics are only of limited help in this task.
This study explores which data and additional sources of
information can be employed to analyse the effects of
the international financial and economic crisis on the
economy in Brandenburg. In addition to existing official
and non-official data, approaches were presented and
discussed that make it possible to analyse these data in
the required context. In particular methods to observe
and forecast regional and local business cycles, to assess
and compare the structure and competitiveness of
locations, to investigate aggregate structural trends and
to analyse firm-level micro-data are included.
Ifo Annual Repor t 2009
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Dresden Branch
Current Projects
A panel data analysis was used to calculate the
estimated labour costs for the new administrative
district structure. To estimate the development of
per capita expenditures on labour, the expenditures
in Mecklenburg-Western Pomerania in the years
1995–2007 were regressed on a set of cost determining variables. The results were then used to
determine the savings resulting from the new district
structure.
Industry Reports
C. Boede, U. Mandalka,W. Nagl, B. Schirwitz, H. Schmalholz, G.Vogt.
As part of Ifo Industry Research, Ifo Dresden produces
reports for 24 selected industry branches twice a year
(Branchen special). In a standardised form, analyses and
forecasts are prepared on the structure of the industry
branch, its business prospects, profits and competitiveness. The information of these special reports can
indicate entrepreneurial weaknesses but also market
potential as well as successful business strategies for
the improvement of performance and competitiveness. The Branchen special reports are employed
primarily by co-operative banks in their lending and
consulting business. Company consultants are thus
provided with a survey of prospects and risk profiles of
individual branches of industry.
The results confirm the advantages of a restructuring
of the administrative districts in Mecklenburg-West
Pomerania. Furthermore the results are similar to
findings of other experts. By varying the estimation,
a range for the savings potential was also established.
Municipal Fees, Property and Business Tax
Rates in the Leipzig Chamber District of the
IHK (Chambers of Industry and Commerce):
An Intra and Interregional Comparison of
the Burden of Public Fees and Taxes on
Businesses
A. Montén, J. Ragnitz, C. Thater for the Chamber of
Industry and Commerce in Leipzig, September 2009 to
March 2010.
Savings Potential from District Structural
Reform in Mecklenburg–West Pommerania
J. Steinbrecher, C. Thater, J. Ragnitz for the Ministry of
the Interior, Mecklenburg–West Pomerania, December
2009 to January 2010.
Municipal fees and tax rates place a burden on
the businesses in a region. The level of these may
therefore play a decisive role in the relocation
decisions of companies. The aim of this project was
to determine the level of the different taxes and fees
in the municipalities in the Leipzig chamber district of
the IHK and to quantify the burden of these costs for
businesses. Regional differences were demonstrated by
comparing the fees and taxes of municipalities within
and outside the chamber district. Based on these
observations, policy recommendations for improving
the location quality of the municipalities in the
chamber district were developed.
Decreasing allocations from the fiscal equalisation
scheme as a result of a declining population, a
reduction in financing from EU funds as well as the
Solidarity Pact II will lead to a loss in revenue for
Meckleburg–West Pomerania in the near future. This
will also affect the municipal sector. As a result of the
law of uniformity and equality within the municipal
fiscal equalisation scheme, the revenue will be in step
with that of the state. The declining revenues will,
however, stand in contrast to the increasing demand
for expenditures as a result of demographic changes.
For this reason draft legislation has been introduced
for a reform of the administrative district, after a first
attempt was rejected in 2006 because it was deemed
unconstitutional. The state government hopes to
realise economies of scope and reduce the municipal
budget. The aim of the project is to determine
the expected per capita savings in labour costs in
both rural areas and self-governing cities.
Study on the location
quality of municipalities
in the Leipzig Chamber
of Industry and Commerce
district
To identify the regional differences in their fee and
tax burdens, it was first necessary to document the
different municipal fees and tax rates in detail. This
analysis was the starting point for computing local
differences. In particular, the fee and local tax payments
of companies in the manufacturing industry, retail
industry, office-based service provision and gastronomy
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Ifo Annual Repor t 2009
Dresden Branch
were considered. In addition to the analysis of burdens
for businesses, the determinants of the variation were
identified to systematically explain these observed
differences. Finally policy conclusions were drawn that
would positively influence the locational characteristics
of the municipalities in the chamber district, in both an
intra- and inter-regional comparison.
Differing local taxes
hamper regional economies
changes of climate change (technological effects) and
the indirect effects, for example, the shortage of some
resources (market effects) were considered and
the vulnerability of specific sectors and business
clusters investigated.
First using official statistics on employment and
gross value added, the economic structure in Dresden
and surroundings was compared with other regions
with a similar population. Thereafter, three scenarios
for a future economic development were determined.
As a starting point to determine to what extent
industries are influenced by climate change the current
input-output tables of the Federal Statistics Office
were evaluated. It was determined which areas of
the German economy are particularly energy and
water intensive and will thus be affected in the future
to a greater degree by a shortage and price increases
of these resources as a result of climate change.
Even within a relatively small region such as the Leipzig
chamber district of the IHK, large differences in the
level of municipal fees and tax rates were observed.
The broader the region of interest is defined, the
larger the variation becomes. Significant differences can
in turn prevent local economic growth if businesses
see the high level of tax rates and fees as a negative
location factor. The analysis shows that some of the
differences can be attributed to local characteristics
(such as population density, deficits in public budgets,
and attractiveness of the location, etc.); however,
the differences in some fees cannot be explained
systematically.The results of this causality analysis form
the basis for the policy conclusions to improve the
location quality of the municipalities in the Leipzig
chamber district of the IHK.
A comparison of economic structures showed that
the regions studied varied considerably depending
on whether they were production-oriented or serviceoriented regions. Dresden belongs to the former
group. In a direct comparison of the average economic
structure of the studied regions with that in Dresden,
it was determined that the producing sector –
comprising the manufacturing industry and the
construction trade – and public and private service
providers dominate. Furthermore, the examined
development paths revealed that depending on
general structural trends obvious regional differences
in industry-specific gross value added and employment
figures are to be expected in the future. The analysis
of climate sensibility at the industry level by means
of an input–output calculation showed an increased
vulnerability in various economically relevant areas
of manufacturing (chemical, glass, metal-producing
and metal-working industries), as well as in the public
sector. Other regionally important sectors, such as
the manufacturing of office machines and mechanical
engineering, can be characterised by a below average
sensibility with respect to energy and water input.
In the course of the project detailed analyses of
consumption and production structures in selected
areas will provide additional insight.
An Integrated Programme for Regional
Adaptation to Climate Change in the
Dresden Region – REGKLAM
M. Thum, B. Schirwitz, G. Vogt for the Technical
University in Dresden, 2008 until 2011.
REGKLAM: Study
on the impact of climate
change on the Dresden
region
Ifo Annual Repor t 2009
During the last few decades, the annual average
temperatures in Saxony have increased significantly.
Model-based projections foresee a continuous
warming in the years to come. Summer rainfall is
likely to decline and will not be compensated by
the slight increases in winter precipitation. Higher
temperatures mainly in winter will affect vegetation,
snowmelt, and energy demand. These changes will
influence the regional ecosystem and it is expected
that storm damage, floods and long periods of
droughts will occur more often. Hence regional
societal adaptation strategies are becoming more and
more important. As a contribution to the REGKLAM
project, the Ifo Institute was asked to work out
projections for the economic development of the
Dresden region (partial project 2.3). The immediate
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