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Standort Deutschland: German direct foreign investment -- exodus of German industry and export of jobs?

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  • Tüselmann, Heinz-josef

Abstract

Against the background of the hotly debated issue of Germany's attractiveness as a business location, the article assess whether, and to what extent, the increased propensity of German companies to invest abroad indicates an exodus of German industry and has negative effects on domestic jobs. The paper reviews the German Direct Foreign Investment (DFI) position in the 1990s; compares it to those in other major industrialized countries, carries out a comparative evaluation of the cost and burden factors at the German location; examines the reasons underlying the DFI decisions of German manufacturing companies and the subsequent types of investment; and finally assesses their effects on domestic investment and employment. The article ascertains that, in spite of the relatively unfavorable comparison of important cost and burden location factors, there are few grounds on which to connect the substantial increase in outward DFI in the 1990s to an exodus of German industry. The assessment supports the assertion that the net effect on domestic investment and German jobs has been positive.

Suggested Citation

  • Tüselmann, Heinz-josef, 1998. "Standort Deutschland: German direct foreign investment -- exodus of German industry and export of jobs?," Journal of World Business, Elsevier, vol. 33(3), pages 295-313, October.
    • Handle: RePEc:eee:worbus:v:33:y:1998:i:3:p:295-313
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