Study shows Bavaria’s location quality is outstanding worldwide
A study published in August 2019 compares the industrial location quality of 45 countries all over the world. The result: Based on 61 factors, Bavaria is the second best industrial location in the world. Only the USA ranked even better, mainly because the access to capital is particularly easy there.
Bavaria positions itself in the top ten in five of the six individual rankings in the study provided by the IW Consult institute in Cologne . The annual study commissioned by the Bavarian Industry Association (vbw) has been assessing the 45 best industrial locations in the world for several years and shows how Bavaria fares compared to these. Germany is also considered in the comparison with all the federal states included. However, Bavaria is also considered individually as a federal state. The development of Bavaria as a business location is an important factor for many industrial companies in their future planning.
Bavaria’s location quality in detail
Bavaria’s six individual rankings which the total ranking is based on at the end are the following:
• State: 2nd place
• Infrastructure: 5th place
• Knowledge: 5th place
• Resources: 9th place
• Expenses: 40th place
• Market: 1st place
The categories mean:
1. State: This ranking includes factors such as economic freedom, government efficiency, regulatory framework, regulation of companies, quality of regulation and product market regulation. Bavaria is in 2nd place here behind New Zealand.
2. Infrastructure: This is where the capacity of flight and seaports, the efficiency of logistics systems, life expectancy, information and communication infrastructure are combined. Bavaria’s 5th place results from the relatively small number of airports and seaports in the federal state. However, the logistics system in Bavaria is the most efficient in the world.
3. Knowledge: The quality of industrial relations, educational participation, the economy’s absorption of technology, share of MINT graduates, research intensity, spending on research and development in proportion to the gross domestic product, patents, industry’s research focus, the innovation environment and share of the population with tertiary education are evaluated here. Bavaria is still ahead of Germany here (rank 8)
4. Resources: Raw material deposits, energy efficiency, energy consumption and the capital market’s performance influence this factor. Despite less naturally occurring raw materials Bavaria can still secure itself a place in the top ten.
5. Expenses: The high labour and fuel costs ensure that otherwise strong industrial nations are beaten. Emerging countries have an advantage due to low wage costs.
6. Market: Industrial and services associations, the distribution of business clusters, market size, breadth of value chain and customer focus: the quality of Bavaria as a location shows everywhere, which leads to it ranking top globally.
Industry as the driver for the Bavarian economy – for all sectors
The study gives an overview of the strengths and weaknesses of various business locations in the world and reveals potential for improvements. Bertram Brossardt, the CEO at vbw, says: "vbw’s conviction is and remains: industry is the future. It drives our economy and also provides growth and employment in other sectors. It is all the more important to permanently provide attractive and competitive location factors in Bavaria."
Efforts are continuously being made to constantly increase Bavaria’s location quality and they are bearing fruit. This is shown, for example, by the rise in economic power in Bavaria which is way above the national average. Other facts and figures about Bavaria’s economy can be found on our website.
You can read the entire study in German here.