ABSTRACT
This chapter examines the factors that lead US businesses to choose to invest in eastern Germany or elsewhere in eastern Europe. It seeks to analyze more closely the broad issues that influence American investment decisions. The chapter presents a case study of two regions within eastern Germany and eastern Europe: the eastern German state of Thuringia, as a representative region of eastern Germany and its toughest nearby competing region in eastern Europe, the Czech Republic. It analyses the advantages and disadvantages of investing in Thuringia versus the Czech Republic by analyzing nine key factors frequently considered by investors in selecting an investment location. These key factors are: macroeconomic stability, infrastructure, characteristics of the labor force, corporate tax rates, the banking system, investment incentives, market location, political stability, and the quality of life. An important factor considered by foreign investors is investment incentives, including direct subsidies, loans on favorable terms, tax breaks, and other inducements to investment.
