September 19, 2017

Bavaria – second best industry location worldwide

Bavaria is a strong and successful industry location: 27 percent of the total value added is generated in the industry sector; despite the dynamic growth of the emerging markets Bavaria’s share in industrial output has remained stable for many years.

Bavaria outperforms U.S.A. and Germany

For the fourth time, the Cologne Institute for Economic Research analyzed the quality of 45 industry locations worldwide. In 2015 and 2016, Bavaria was declared second best with Switzerland ranking first and the U.S.A. third, followed by Germany on rank four.

In five out of six fields, Bavaria is ranked in the top ten. Bavaria particularly excels in the fields “state” (especially regulatory framework), “knowledge” (predominantly innovation) and “market” (value chain, link of industry and services). The biggest challenge remains the high level of labor, export and energy costs. In this regard Bavaria comes in 40th only.

Emerging markets are catching up at a fast pace

In general, the quality of location in advanced economies is much higher than in the emerging markets. But these markets are developing in a very dynamic way, so the gap to the advanced economies is decreasing steadily.

This process is underlined by a ranking that assesses the dynamic of the above mentioned 45 industry locations. Looking at the pace the quality of the industry locations has developed between 2000 und 2015, emerging economies naturally scored much higher than advanced ones – with Bavaria ranking 21st. In this regard, Bavaria matches the average of all countries analyzed in this study. The only non-emerging-country with a more dynamic development of the location quality than Bavaria is South Korea. Belgium, Sweden and Norway on the other hand are almost at the same level.


Volker Leinweber

Volkswirtschaftliche Grundsatzfragen

Volker Leinweber