Standort Deutschland – is Germany losing its appeal as an international manufacturing location?

Against the background of intensified competition for company locations, hotly debates Germany′s position as an international manufacturing base. Aims to identify how far concerns about Germany′s location quality are justified. After examining German direct foreign investment (DFI) developments as an indicator for location quality,analyses important underlying variables, which actually determine the quality of location. The DFI position compares unfavourably with those of other major economies. The German position has deteriorated further since the early 1990s. The eastern region′s location quality seemed to be even poorer than that of the western region. The subsequent comparative analysis of quantifiable cost and burden factors and qualitative factors revealed that, on balance, the relative location weaknesses outweighed the relative strengths in both German regions. Grave disadvantages were disclosed in eastern Germany. A reliable prognosis concerning Germany′s future location quality could not be made, since it is too early to predict the net effect of recent changes of certain location factors.