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Despite remarkable progress in terms of adjustment, the productivity of the East German industry is still below the West German level. However, the individual East German businesses differ considerably from one another in terms of their productivity. It is clearly demonstrated that innovative businesses, in contrast to non-innovative businesses, exhibit a far more positive development regarding productivity. Businesses that cooperate with West German or foreign shareholding companies are equally faster in reaching the West German level than independent businesses. These are the findings of a study carried out by the Centre for European Economic Research (ZEW) in Mannheim.

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The economic situation in the business-related services sector has remained at a constant high level in the third quarter of 1998. Merely the expectations concerning the earnings situation has improved once again as compared to the same quarter a year ago. All other business factors have remained unchanged, both compared to the same quarter one year ago, as well as to the previous quarter. Hence, for the second quarter in succession, there has been no improvement in the economic situation. The slight stagnation in the business-related services sector has thus far had no impact on the employment figures of this sector. In particular highly-qualified workers have good prospects of getting a job. Low-skilled workers and graduates with vocational training on the other hand have more reasons to fear for their jobs. It also becomes clear that process innovations – i.e. the use of new and substantially improved technologies – exert a negative influence on the demand for low-skilled staff. These are the findings of a representative survey carried out by the Centre for European Economic Research (ZEW) in Mannheim, in collaboration with the "Verband der Vereine Creditreform" in Neuss, in September 1998. The business-related services sector encompasses tax advisors and certified public auditors, business consultants, architects, technical consultants and planners, vehicle renting, machine renting, forwarders and logistic firms, software providers, advertising agencies and waste management firms.

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One of the most serious problems of current economic policy is the high unemployment rate. Yet, whereas in the manufacturing industry jobs are continuously being phased out, the service sector is regarded as genuinely promising. In this sector, a large number of new jobs are created – however, poorly qualified workers are largely excluded from this. A current study by the Centre for European Economic Research (ZEW) in Mannheim shows that, in relation to all employees in the business-related services sector, the percentage of low-skilled workers decreased by 30 per cent between 1991 and 1996. By contrast, the share of university graduates increased by about the same percentage in this very period.

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The profit margin of German exporters remains largely unaffected by exchange rate fluctuations. In the case of a real appreciation of the DM, an average of 20 per cent of the appreciation - on the basis of 65 selected export products - is balanced by a decrease of the profit margin, while the remaining 80 per cent find expression on the foreign market in the form of a price increase. However, the percentage distribution varies according to the product and the country of import. These are the findings of a current study on price setting strategies on export markets between 1988 and 1994, carried out by the Centre for European Economic Research (ZEW) in Mannheim

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A current study carried out by the Centre for European Economic Research (ZEW) in Mannheim contradicts with the view, that it is, above all, government regulations that contribute to environmental protection. In fact, the study shows that the innovation impact resulting from the implementation of economic instruments – e.g. environmental taxes – and regulatory instruments – e.g. environmental standards – strongly depends on the conditions in the respective sectors. Depending on the economic sector, the very same instrument may produce different effects. The type of innovation is likewise a determining factor. According to the ZEW study, eco-innovations are innovations that are aimed at the prevention and reduction of pollution caused by anthropogenic activity, while at the same time they also contribute to remedy such damage already done and facilitate the diagnosis and control of environmental pressure.

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The number of self-employed academics is often underestimated. And yet, the self-employment rate among foremen, technicians and university graduates in Germany is far higher than among employees with an apprenticeship and persons without any vocational qualifications. While in 1995, an average of ten out of 100 employees of the total active population was self-employed, the ratio among foremen was 22, and 16 among academics. These are the findings of a study carried out by the Centre for European Economic Research (ZEW) in Mannheim.

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In September, the building of the Mannheim-based Centre for European Economic Research (ZEW) will provide space for an art exhibition for the first time since its inauguration in 1997. The renowned research institute headed by the member of the German government economics advisor Prof. Wolfgang Franz and the Director of Business and Administration Ernst O. Schulze invites the art-loving public to an interesting encounter between science and art.

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The economic upswing in the business-related service sector also continues in the second quarter of 1998. The situation concerning revenue, demand and employment has improved in comparison to the previous quarter as well as to the same quarter one year ago. However, the upward development is weaker than in the first quarter of 1998. Nevertheless, the boost in Western German domestic demand and the slight improvement of the overall economic situation in the new federal states suggest that the business cycle has not yet reached its zenith in the case of the business-related service providers. The entirely positive expectations for business-related service providers indicate a further upswing in autumn 1998. There are major shortcomings in the preparation for the EURO. Roughly five months before the monetary union, only very few business-related service providers have taken concrete preparatory steps. This is the result of a representative survey carried out by the Centre for European Economic Research (ZEW) in Mannheim, in collaboration with the "Verband der Vereine Creditreform" in Neuss, in December 1997. The economic sector of business-related services encompasses tax advisors and certified public auditors, business consultants, architects, technical consultants and planners, vehicle renting, machine renting, forwarders and logistic firms, software providers, advertising agencies and waste management firms.

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The Petersberg tax reform proposals as well as the model of a taxation including consumerism and adjustment in rates are two concepts which continuously crop up in the discussion about the corporate tax reform. Both proposals are expected to cause a significant impact regarding investment and innovation in form of a reduction of the effective overall tax burden. When compared to the prevailing conditions in 1997, the overall tax burden for business would be reduced by 14 to 20 per cent in the case of the Petersberg tax proposals, and by 25 to 50 per cent in the case of a taxation including consumerism and adjustment in rates. These are the findings of a study carried out by the Centre for European Economic Research (ZEW) in Mannheim on behalf of the Federal Ministry for Education, Science, Research and Technology. The study analyses the effects of the effective overall tax burden as well as the resulting changes concerning the innovation and investment behaviour of innovative and non-innovative companies, in the case of the Petersburg proposals or the taxation including consumerism and adjustment in rates would being implemented.

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With effect from June 3, 1998, Dr. Jürgen Strube, chairman of the Board of Executive Directors, BASF SE, is appointed as one of the nine members of the ZEW Supervisory Board (Centre for European Economic Research, Mannheim). Senator Hermann Freudenberg, who has supported the successful establishment of ZEW by word and deed since 1991, retired from the Supervisory Board. Senator Freudenberg had already been member of the ZEW founding commission, where he contributed practical advice to the discussion about the tasks of ZEW concerning the demands that industry places on a new economic research institute. After the institute’s foundation, the entrepreneur, who had been chairman of the Freudenberg & Co. Board of Partners from 1988 to mid-1997, has held the position of deputy chairman of the ZEW Supervisory Board for almost seven years and as such has been an esteemed contact person in the Executive Board.

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