Investments Follow the Growth – The Impact on the Automotive Location of Germany
(June 2015)

A brief study by the Chemnitz Automotive Institute (CATI)

by Prof Dr Werner Olle

June 2015

In a globalised world – assuming the free flow of capital – investments go in only one direction: they flow to the regions with the most promising growth potential over the long term. While we in Germany are controversially discussing the hesitancy to invest or even speak of “investment gaps”, the Deutsche Bundesbank (German Central Bank) has reported significant increases in German direct investments abroad year in year out. This was also the case in the most recent survey in April 2015.

It has been a long time since we have spoken of rising direct investments abroad as having a possible negative impact on the domestic job market in the sense of “exporting jobs”. The analytical and empirical findings were and are too clear. The internationalisation of German companies has supported the international competitiveness of these companies and promoted domestic growth in most sectors. Today, the German economy faces the question of what the limits of this global-market-induced growth model are since it has achieved such a high degree of internationalisation. This applies in particular to the German automotive industry, which in total manufactures 90% of its products in domestic and foreign production for foreign markets.

In the following

  • we will analyse important characteristics of the achieved internationalisation of the German automotive industry, and
  • address the limits and risks related to it and point out additional internationalisation potential.

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