Germany is better known as a source of FDI rather than a destination. It is generally seen as a country that does not particularly need or seek crossborder investment. However, in the case of Saxony-Anhalt, a state in eastern Germany, inward FDI has been crucial for the region's economic turnaround.

After German reunification in 1990, the heavily industrialised state fell on hard times with local companies struggling to adjust to the free market. By 2000, Saxony-Anhalt's unemployment rate was the highest in the country, at 20.2%.

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“These were tough times, we were really struggling and a lot of people had to look for a job in the west [of Germany],” recalls Dr Carlhans Uhle, managing director of IMG, the state's economic development agency.

Growing employment

By 2014, the unemployment rate had fallen to 12%, partially thanks to subsidies doled out by the federal government and the EU, but also as a result of crossborder investments, with local authorities aggressively seeking FDI in sectors such as chemicals, food production, energy and automotive components.

“We have much lower production costs than in the west [of Europe], but still we are part of Germany, by far the biggest and most stable market in Europe. And we are willing and ready to accommodate potential investors,” says Mr Uhle.

Such willingness goes beyond declarations, says Tommy Strömberg, chief operating officer of ITS Halle Cell, a German subsidiary of Norwegian photovoltaic cell manufacturer Innotech Solar. In 2011, Innotech Solar opened a $27.2m solar cell reprocessing plant in the region, but before that happened Mr Strömberg was tasked with getting the operation of the ground.

“In order to start production of solar cells, you have to obtain a number of approvals in terms of the chemicals you can use. It is a very painful process, but local economic developers helped me with that,” says Mr Strömberg. “They are also very helpful with making the right kind of connections, which is very important for newcomers to the region,” he adds.

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Warm welcome

Local authorities are quick to make connections, be it to help foreign investors or to attract them. Italian aluminium products manufacturer Almeco is a good example. In 2005, Almeco bosses met a group of Saxony-Anhalt representatives by chance. Four days after their first meeting, they were already in talks with local authorities and utility providers.

“They lined up all these meetings and were willing to hear us out. They really made us feel that they welcome our investment here,” says Giorgio Gabriele Locci, managing director of Almeco's plant in Bernburg, a small town 50 kilometres south of Magdeburg, the state's capital.

After a long day of meetings, final talks took place in a local restaurant where the deal was struck. For a lack of other ways to lock down an agreement, a beer coaster was used to sign the contract. “That shows how fast things can be done here,” says Mr Locci, pointing at the framed beer coaster prominently displayed in the lobby of Almeco's Bernburg facility.

After the contract was signed, regional authorities also helped to build road access to Almeco’s new plant and a local bus company rerouted one of its buses to provide transportation for its employees. “[The people of Saxony-Anhalt] try to understand your needs and they react accordingly,” says Mr Locci.

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