Foreign investors are currently pouring billions into huge factories in the East. This is to be welcomed, says Dresden economic researcher Joachim Ragnitz. However, the overall effect is limited.
According to the Ifo Institute, the billions of investments made by Tesla, Intel and TSMC will only provide a limited additional boost to the East German economy overall. “In principle, it is of course good if there are large settlements,” said Dresden Ifo expert Joachim Ragnitz to the German Press Agency. “But I would warn against the idea that large settlements could save productivity throughout East Germany.”
The effects on employment should not be overestimated, says Ragnitz in an essay on the productivity gap in the East. 10,000 people are now employed in the electric car factory of the US manufacturer Tesla in Grünheide near Berlin. But that is only 0.9 percent of all employees in Brandenburg. The expected jobs in the planned chip factory of the US company Intel in Magdeburg and the Taiwanese chip manufacturer TSMC in Dresden are also rather insignificant in relation to the total employment in Saxony-Anhalt or Saxony.
The establishment of supplier companies is important
Even with a view to industrial value creation, “the positive effects are likely to remain manageable,” analyzes the economist. A broader impact could be expected if supplier companies also set up shop. However, this is not necessarily the case for globally active companies.
However, Ragnitz expects one effect: Because the large industrial plants offer jobs with good wages, incomes in the surrounding areas are also likely to grow – otherwise existing companies would not be able to keep their employees. However, some smaller companies would then probably not be able to go along and disappear, said Ragnitz in an interview with dpa.
The strategic goal is independence from China
When asked whether the billion-dollar state subsidies for Intel and TSMC were worth it, Ragnitz said that the reason for the subsidies was not regional economic policy, but the strategic goal of becoming more independent of chip production in China. “You can do that,” said Ragnitz. However, he himself is rather “skeptical as to whether this industrial strategy is wise.” Companies may have received subsidies that would invest either way. In any case, it makes sense to tie the subsidies to the condition that the chip factories producing here also deliver to Europe.
Intel announced in March 2022 that it would produce chips in Magdeburg from 2027 and build two semiconductor plants for this purpose. 30 billion euros are expected to flow into the project; The federal government is contributing around ten billion euros of this. Five billion euros in state funding are earmarked for a plant owned by the Taiwanese group TSMC in Dresden. Production here is also scheduled to begin in 2027. Tesla has invested an estimated 5.8 billion euros in its factory in Grünheide and has been building electric cars there since March 2022.
Source: Stern
