The High-Tech Balance in Germany | Business| Economy and finance news from a German perspective | DW | 15.08.2002
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The High-Tech Balance in Germany

Bavaria's high-flying IT sector has earned the state the nickname as one of "laptops and lederhosen." But the German government is eager to prove the rest of Germany is catching up.


Germany wants more high-tech industries to settle here.

One of eastern Germany's most prestigious investment projects in the IT sector, Communicant Semiconductors Technologies, celebrated its cornerstone-laying ceremony on Wednesday.

It comes as no surprise that Education and Research Minister Edelgard Bulmahn stepped in for Chancellor Gerhard Schröder, who had to cancel his visit to the ceremony to visit the flooded regions in eastern Germany. Research development is of key interest to the federal government.

In communist East Germany, Frankfurt on the Oder was a center for microelectronics. But following German reunification, it couldn't keep up with the competition from the West. Communicant wants to change that. And it's counting on support from Berlin.

"This is a good day for the state of Brandenburg," said Bulmahn, adding that Communicant's success was important for the federal government.

The 1.5 billion euro ($1.48 billion) factory will produce microchips and is expected to begin production in 2004. In addition to 1,500 people working at the facility itself, Communicant said it anticipates 1,300 further jobs in the service and supply sectors - a welcome change in a region suffering from an unemployment rate of around 20 percent.

Major investors are semiconductor giant Intel and the emirate Dubai. But the federal government and the state of Brandenburg will also contribute 320 million euro ($316 million).

Education and research for the future

The Social Democratic-Green coalition government in Berlin has focused on promoting Germany as a country geared for the future. According to the Ministry of Education and Research BMBF, Germany has never invested more in education and research projects in its history. Since 1998, the BMBF budget has jumped over 21 percent to 8.8 billion euro ($8.68 billion).

The largest sum is devoted to the IT sector. Over the past four years, financing for information technology has increased 13.6 percent to 279.5 million euro ($275.7 million), BMBF said.

In 1999, the BMBF, together with the Federal Economics Ministry, also launched a five-year program called "Innovation and Jobs in the Information Society of the 21st Century". Its aims include improving access to new media, promoting multimedia in schools and boosting the IT and communication sectors.

Bildungsministerin Edelgard Bulmahn

Edelgard Bulmahn

Earlier this year, the government presented interim results - and hailed the program as a great success.

"Germany is more future-oriented than ever before," said Bulmahn (photo).

Information and communication technologies sectors had developed into a leading economic sector, contributing to 7 percent of the country's gross domestic product.

Also, e-commerce in Germany was posting turnover of some 20 billion euro ($19.7 billion), making it the number one in Europe for this sector, the government said.

A downward trend in IT

The German association for information technology, telecommunications and new media, Bitkom, welcomed the initiative.

"The federal government achieved its goal of giving significant impulses for a stronger and wider use of information and communication technology," Bitkom's director general Bernhard Rohleder said in a statement.

Internet access technology, in particular, had expanded. But, he added, more needs to be done in the education system. Media competence should be integrated as a permanent component of teacher education. Further education in Internet use should also be improved, Rohleder said.

Despite the efforts by the Berlin government, the number of jobs in the IT and telecommunications sector is declining - for the first time since the early 1990s. According to Bitkom, employment is down 3.4 percent to 791,000 jobs in 2002. Producers of mobile phones and networks are slashing the most positions, the organization says.

But these cuts do not affect top positions.

"Jobs are being cut almost exclusively in administration and distribution," says Stephan Pfisterer of Bitkom. This includes many people who entered the IT sector from other branches. "But there is still a demand for IT specialists with university degrees or many year's experience," he added.

Laptops and Lederhosen The true home of IT in Germany is the southern state of Bavaria. The state has introduced several successful programs to attract investors from the new economy sector. Apple, Cisco, Compaq, Microsoft, Oracle and Sun Microsystems are just a few of the companies that have their European or German headquarters in Bavaria.

Prime Minister Edmund Stoiber, who is the opposition candidate for chancellor in the upcoming federal elections, is making no secret of this success story. Unemployment in Bavaria is almost half the national average while it leads the country in per capita income.

The transition from an agricultural state 50 years ago to the "high-tech mecca" of Europe, as Microsoft founder Bill Gates has called Bavaria, is no accident.

"To help Bavaria stay in the fast lane, the state has divested itself of several industries and reinvested the proceeds from privatization amounting to some $4 billion in a massive program called 'Future Initiative Bavaria'," said minister Erwin Huber, head of the Bavarian state chancellery, in a statement.

"This program is used to finance investments in the industrial and scientific infrastructure," Huber said. "With a view to consolidating and further enhancing Bavaria's top position as a leading high-tech region in Europe."

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