14. April 2016

Bavaria as industry location: An international comparison - Costs

Part 6: Costs

The presence of Bavaria’s strong industries makes the state a top industry location. About one quarter of the total gross value added is generated by the manufacturing sector, giving Bavaria the fourth-highest share of industry worldwide. This success is thanks to the performance and efficiency of Bavarian companies as well as to the quality of Bavaria as an industry location.

A study conducted by IW Consult GmbH on behalf of The Bavarian Industry Association (vbw) compared the quality of 45 countries in terms of what they have to offer as a location for industrial businesses. Bavaria came in an overall second place. The USA reached seventh place. The study identified six categories that inform the investment decisions of industrial businesses: state, infrastructure, knowledge, resources, costs, market.

Costs: USA in 26th place, Bavaria in 39th

In the “costs”-category, the labor costs, fuel costs, interest costs, export costs as well as the tax rate in each country is assessed. The USA achieved 26th place in this subcategory, Bavaria was ranked 39th. Bavaria suffers particularly from the high labor costs in the state. These are however also mostly offset by a higher productivity. Developed nations like the USA and Bavaria typically fall behind emerging markets in Asia and South America, as the costs for labor, export and fuel are usually much lower in these regions. Indonesia, Malaysia and Thailand were the top three ranked countries in the “costs”-category. The only two industrialized nations to reach the top ten in this category of the ranking were South Korean in eighth place and New Zealand in tenth place.

In the next issue we will provide details about the results in the final sub-category, market.

To read the complete study, please follow the link (German only)


Volker Leinweber

Volkswirtschaftliche Grundsatzfragen

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Volker Leinweber