Methodology and Results for 45 Countries: IW Location Index

The relevant conditions are grouped together in six subject areas and analysed for Germany and its most important competitors using some 60 indicators. The index is calculated from the perspective of the year 2015 and a comparison of the years 2000 and 2015 reveals the dynamics of location quality. The analysis shows very favourable conditions for locating manufacturing in Germany. In a ranking of 45 countries Germany comes third behind Switzerland and the USA. Its particular strengths lie in the fields of knowledge, governance and infrastructure, while its comparatively high costs constitute a distinct disadvantage. Despite its good starting position, Germany emerged as one of only a few traditional manufacturing countries that had managed to maintain its quality as a location for investment over the preceding 15 years. An in-depth analysis establishes a positive correlation between the development of location factors and industrial growth over the period 2000 to 2015. The dynamic variant of the location index can therefore be used as one of the explanatory factors of industrial development. Varying the reference time to the year 2009 shows that the development of location quality over the longer period is not a continuous process.