[…] there is no incentive for companies to go and open their doors in east Germany […] They are building modern factories with high automations and are getting massive incentives to do so.
Which one is it? No incentives? Massive incentives?
While I do see a difference between those two “incentives”, they are not that different to me. Both are about the general economic conditions which a company uses to determine where to invest. Also in both cases the conditions are influenced by politics, and shaped by financial policies.
It is distinctly different though. it is especially dangerous to rely on subsidies as a means for attracting businesses. There was an example of Nokia who received about 100 Million to build a cellphone factory in the 2000s. After the subsidies ran out ten years later, they moved the plant to Romania. This is the risk of subsidised business. You pay the difference for the poor conditions, don’t receive more in return and then the business goes away anyways.
Which one is it? No incentives? Massive incentives?
The first one is intrinsic incentives, the second one I should have called subsidies. You are correct it’s messy like this.
While I do see a difference between those two “incentives”, they are not that different to me. Both are about the general economic conditions which a company uses to determine where to invest. Also in both cases the conditions are influenced by politics, and shaped by financial policies.
It is distinctly different though. it is especially dangerous to rely on subsidies as a means for attracting businesses. There was an example of Nokia who received about 100 Million to build a cellphone factory in the 2000s. After the subsidies ran out ten years later, they moved the plant to Romania. This is the risk of subsidised business. You pay the difference for the poor conditions, don’t receive more in return and then the business goes away anyways.