Friday, January 7, 2011

German properties | Properties Germany | Property Investment

Unshackled Saxony Rises to Become East Germany's Brightest Star 

Two decades ago, Saxony was as beaten down as the rest of East Germany. In Dresden, its capital, fire- bombed Baroque palaces and museums had been partially rebuilt, but raw sewage still poured into the Elbe River. Telephones were rare. Young people longed to move West to escape shortages and censorship.

There was some manufacturing: Saxons made East Germany’s flimsy Trabant, but the sedan was so unloved, people joked that it doubled in value when filled with gasoline.

Today, Saxony is one of the brightest stars in the East. Saxons build BMW cars, Porsches, and Volkswagens, chips, and watches from A. Lange & Soehne that cost up to $500,000 apiece, reports Bloomberg Businessweek in its Oct. 4 issue. Gross domestic product has grown 11.2 percent since 2000, a higher rate than any of Germany’s other 15 federal states, according to data from the state’s Economy Ministry.

Saxony’s dramatic gains owe much to pro-business government policies that unleashed the famous Saxon work ethic, inventiveness, and attention to detail. “Our companies have been very good at carving out niches and customizing products,” says Saxon Economy Minister Sven Morlok.

Two key figures in the transformation were Kurt Biedenkopf, now 80, the Christian Democrat who served as premier from 1990 to 2002, and the late Kajo Schommer, who served as economy minister during the same formative period. Together they developed a “lighthouse principle” in which industries with high potential -- especially autos and microelectronics -- got most of the state aid.

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