Structure, determinants and effects of FDI in German "Bundesländer"

Only very few studies have looked at the effects of foreign direct investment (FDI) on the home economy. Specifically, there is a gap in the literature when looking at the structure, determinants and effects that FDI has on German federal states (Bundesländer). This contrasts with the exceptional importance of FDI for the future perspectives of single regions, especially with regard to competition for the best investment projects between the different federal states. Therefore, the aim of this project was to analyse the development, structure and effects of FDI in the German Bundesländer over time. To this end, we presented an exhaustive range of descriptive statistics as well as used modern econometric techniques. Data came from the micro-level MiDi database provided by the Deutsche Bundesbank and from the IAB Establishment Panel. Investigating the regional determinants of FDI and its effects on plant-level employment and productivity, we provided answers to highly relevant policy questions (see IAW Policy Reports No. 1)