Open Markets as a Source of Prosperity – Evidence of the Federal State of Baden-Wuerttemberg

Abstract

Baden-Wuerttemberg's economy is characterized by a close combination of highly specialized R&D-intensive industry and business related services, with the manufacturing sector generating a significantly higher share of value added than the average of the federal states (Länder). Over the long-term trend, these structural framework conditions have generated above-average GDP growth rates and also per capita income. Another peculiarity ist that economic output is generated relatively even within the regions of the federal state (Land). This economic model requires low transaction costs in the broadest sense to serve a large relevant market. For this reason unhindered access to international markets is a necessary prerequisite for prosperity. However, there must be a certain competitive and innovation advantage. Maintaining the competitiveness and innovation capacity of the location is a permanent task for economic policy.