Direct investment is not a job killer

The accusation that direct investment in the ten EU member states in Central and Eastern Europe would first of all lead to a relocation of German jobs to low-wage countries is confuted by a study conducted by the Cologne based Institute for the German Economy (IW). The number of employees in subsidiaries of German companies in the ten EU member states of Central and Eastern Europe increased from 31.000 in 1990 to 757.000 in the year 2004. But in the course of this process only 120.000 jobs were relocated from Germany to Central and Eastern Europe.

This finding of the IW study can also be explained by the reasons which guide German companies committing themselves abroad. Thus, only about 30% of direct investment in regions between the Baltic Sea and the Black Sea were made in order to profit from cheaper production costs there. About 70% of this investment, however, served the purpose of conquering new markets or securing market shares already gained. Thus, the 41 billion Euros which were invested by German companies until 2004 in Central and Eastern Europe contributed to the strengthening of the German parent companies thereby also securing jobs in Germany. Detailed findings are available online. GERMAN