Economic relations of German federal states with Austria

The German federal states draw a highly diverse picture of the degree to which they do business with neighbouring nations. While Bavaria has a long tradition in trading with Austria, Baden-Württemberg and North-Rhine Westphalia rather do business with their respective neighbours – Switzerland and the Netherlands. First analyses of FDI activities confirm a high presence of multinational firms in border regions.

This project evaluated the different relations of the German federal states with bordering countries, and in particular with Austria, providing answers to the following questions: Are international activities among adjacent regions especially intense and can this phenomenon be purely explained by geographical factors? What role do other regional factors play, e.g. the structure of the economy? To shed light on the different performances of the German federal states and to reveal potentials for improvement, we made use of descriptive and econometric techniques.