European Economy. Economic Papers. Germany's growth performance in the 1990's

Figure B1.2: Share of sectoral GVA in total GVA in East and West Germany
in 2000
(in per cent)
Source: Arbeitskreis “Volkswirtschaftliche Gesamtrechnung der Länder”
The electronics industry is among the industries with the strongest growth of production in
East Germany and doubled from 1995 to 1999. In 1998, about 34,000 were employed in this
industry, or 6% of all employees in the manufacturing sector. A particular specialisation is in
microelectronics which had already been developed in the GDR with about 120,000
employees, including a research centre for microelectronics in Dresden and semiconductor
1
26
4.3
17.4
31
20.3
2.4
18.6
9.6
15.8
26
27.6
0
5
10
15
20
25
30
35
agriculture, forestry, fishery
indus try (excl. construction)
construction
trade,tourism, trans port
finance,housing,bus iness
services
public and private services
west germany
east germany

---

19
Box 1 (continued)
production plants in four locations (Erfurt, Dresden, Frankfurt/Oder and Neuhaus/Thüringen).
Following the closing down or privatisation of these plants during the 1990s, Dresden (capital
of Sachsen) developed a cluster of microelectronics with currently around 500 companies
with more than 20,000 employees working directly in microelectronics or indirectly in related
branches. Production plants of major companies include Infineon, AMD (Advanced Micro
Devices) and ZMD (Dresden Centre for Microelectronics). Furthermore, there are 15
independent research institutes and more than 150 software offices active in this sector.
The East German chemical industry underwent the most intense restructuring after re-
unification. Only in 1997 did employment increase again for the first time and has remained
since then at a level of 32,000. The so-called “chemicals triangle” has a number of locations,
most of which are in Sachsen-Anhalt and in basic materials including hydrogenation
(Rodeleben), nitrogen products (Piesteritz), chlorine, phosphorus and silicon chemistry
(Bitterfeld/Wolfen), olefins (Buna), refinery and petrochemicals (Leuna). The most important
location is the “ChemiePark Bitterfeld/Wolfen” where there are 3,600 direct jobs in the
chemical industry and another 7,000 indirect jobs. The production there is rather capital-
intensive with an investment per job of about € 500,000. It is a traditional chemical industry
location which was founded at the end of the 19
th
century on the basis of exploitation of
brown coal which however no longer exists today. The advantages of this cluster in
Bitterfeld/Wolfen are best illustrated by the common utilities for energy and waste as well as
a closed product flow cycle for synthetic quartz glass production on the basis of co-operation
between different plants.
The production of automobiles was one of the most dynamic industries in East Germany after
re-unification. This dynamism was supported by rather early decisions to stop the production
of the GDR brands “Trabant” and “Wartburg”, which were not competitive in terms of
quality, and the investment decisions for highly productive production plants by Volkswagen
(in Mosel and Chemnitz in Sachsen) and Opel (in Eisenach in Thüringen). This allowed them
to make use of the available resources at these locations whose tradition goes back to the
predecessors of Audi and BMW at the beginning of the 20th century. At present there are
about 30,000 employees producing more than 400,000 cars per year in East Germany, which
is about 8% of the domestic production of German car producers. Further investments which
have recently started or will soon start production are DaimlerChrysler in Ludwigsfelde
(Brandenburg), Porsche in Leipzig (Sachsen) and a transparent factory for assembling a
Volkswagen luxury model in the centre of Dresden. In July 2001, BMW decided to build a
new production site in Leipzig, creating 5,000 direct jobs in the medium term and an
estimated 5,000 indirect jobs. Leipzig had been chosen after a long selection process among
applications from more than 250 cities and regions. The main arguments in favour of Leipzig
had been the proximity to the BMW plants in Bavaria, the good infrastructure, the subsidies
to be expected (28% of the investment), the availability of skilled labour, and a flexible
working time scheme. The latter was agreed with BMW’s workers council so that machines
will be running between 60 and 140 hours per week while individual workers’ time will be
accounted on a medium-term basis.