Germany as a Business Location Loses out in Country Comparison

Research

Country Index for Family Businesses: Current Crisis Should Be Used for a Clear Change of Direction

Germany’s attractiveness as a location for family businesses cannot compete with the top locations in North America, Western Europe and Scandinavia. Germany is rated unfavourably, particularly in the areas of regulation, tax burden and energy. The gap to the top locations is also widening with regard to infrastructure. In contrast, the financial stability offered in Germany is rated comparatively positively. This is shown by the new Country Index for Family Businesses, which ZEW Mannheim has calculated for the ninth time on behalf of the Foundation of Family Businesses.

Due to its poor performance in the individual categories of the cross-country comparison, Germany moved down four places and now ranks only 18th out of the 21 industrialised countries considered. However, the countries ranked 14th to 19th all have very similar scores. The results of the Country Index show that locations within the EU as a whole continue to lose ground to Switzerland and North America.

The current crisis should be seen as an opportunity for a clear change of direction, especially towards a reduction of obstructive regulatory burdens, the study authors write. Germany should concentrate more strongly on remaining competitive in terms of tax policy. In view of the shortage of skilled workers, a turnaround in education policy is also necessary. The head of the ZEW Research Unit “Corporate Taxation and Public Finance” and co-author of the Country Index, Professor Friedrich Heinemann, advocates generally speeding up the approval and implementation process of public investment projects.

The Country Index for Family Businesses examines the most important location factors for family businesses and compares 21 industrialised countries on the basis of six categories: “taxes”, “labour costs, productivity and human capital”, “regulation”, “financing”, “infrastructure and institutions” and “energy”.