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This contribution discusses to what extent the expansion of German firms in Central East European (CEE) leads to FDI diversion from traditional host countries. Diversion is defined as reduction of FDI in absolute terms in traditional host regions as a consequence of expansion in CEE countries. The analysis is based on a Bundesbank micro data set (MIDI). The data indicate that expansion in the East is complementary rather than substitutive to FDI at traditional locations both in the EU periphery and the Core EU. Firms expanding foreign operations in general do so at CEE locations as well as in Western and Southern Europe. Poor performance at traditional locations in Western and Southern Europe rarely goes along with expansion in the East. Mobility of production and jobs from traditional to “new” locations is limited. There is strong heterogeneity of FDI firms to be observed with regard to employment performance in the regions considered.

Die Zuwanderung von hochqualifizierten Arbeitskräften wird von Unternehmern, Politikern und Wissenschaftlern gewünscht. Welche Position nimmt Deutschland im internationalen Wettbewerb um die „hellsten Köpfe“ ein? Welche Steuerungswirkungen hatte die deutsche Zuwanderungspolitik in der Vergangenheit? Wie wirkt die gegenwärtige Politik auf die Arbeitsmigration?

The tradition of gravity models is in the analysis of trade flows with market size and geographic or economic distance as core variables. Both these variables can be important determinants of FDI, too. However, when such models are used to explain FDI, there can be differences in the mode of operation of these variables so that the interpretation can become uncertain. Market size can reach beyond the host country and distance can be an incentive as well as an impediment to FDI. In the present paper, we use gravity-type models in order to assess the level of German FDI in CEE countries, distinguishing between the four nearby core countries and the other six EU accession countries. Estimates are done both on the basis of an in-sample as well as an out-of-sample approach on the basis of FDI in 81 important host countries. From the various specifications it becomes obvious that (1) beside the size of the host country, the market potential of neighboring countries is an important determinant of the regional structure of German FDI, and (2) the costs of operating at a distance seem to be weighted higher than the advantage of being close to distant markets. Geographic distance seems to be more important than various measures of economic distance. On the whole, gravity-type models seem to be appropriate to explain the regional structure of FDI. However, the results should be interpreted with caution given the extremely wide confidence intervals of the estimates which is a feature of former studies, too.

Compared to other Western European countries, Germany was less successful in attracting FDI in the 1990s. The falling behind in inward-FDI should be no problem if foreign-owned firms (FoFs) were only substitutes for indigenous firms. However, to the extent they differ significantly in terms of performance and structure, FoFs could be an interesting target group of economic policy. We empirically test three hypotheses: FoFs enjoy a productivity advantage over purely nationally operating firms but not - or less so - over multinationals headquartered in Germany (H1). The demand for qualified labour is higher in FoFs compared to German firms (H2). FoFs show a more flexible conduct on the labour market than German-owned firms; they are less integrated in the traditional national labour market system (H3). Our analysis is based on the establishment panel of the Nuremberg Institute for Employment Research (IAB). The data largely support H1 and H2, whereas there is hardly evidence of a particular flexibility in the FoFs' conduct on the labour market.

The growing importance of Japan on the world market has brought with it changes in the international division of labour and a shift in the focus of the expansion in world trade away from the EC and the USA. What factors determine the shares of the EC, the USA and Japan in international trade? How dependent are these three economic powers on the world market? What conclusions can be drawn regarding their relative competitive strength?

Since mid-2006, RWE Power has been planning the construction of a coal-based demonstration power plant with carbon capture, transport and storage. A combined-cycle gas turbine plant with integrated coal gasification (IGCC) was chosen as the power plant technology to be used. The use of a modern gas turbine of the F class enables the plant to achieve a gross electric capacity of approx. 450MW. The separated CO 2 is to be stored safely over the long term in deep saline aquifers. The first grid connection is due to take place at the end of 2014/start of 2015. As regards the power plant, a feasibility study was conducted to analyze and evaluate the technologies available in the process chain, decide on a technical concept, and establish the technical and economic parameters of the process. As far as CO 2 transport & storage is concerned, regional screening is about to be completed and the potential storage sites are being evaluated in-depth with respect to seismic data interpretation, lithology, and structure. This presentation will outline key findings and results of this phase for both the power plant and transport & storage and present the next steps to be taken in the execution of the project. In light of a market situation characterized by high capacity utilization of potential contractors and an extraordinary rise in investment costs this aspect is currently very important. Another basic prerequisite needed for the project to proceed according to schedule is the establishment of a European and national regulatory framework for carbon transport and storage by mid-2009.