Location competition describes the competition between cities, municipalities, regions or states for factors of production and, above all, for the settlement of companies. The level of wage costs, the tax burden, the costs of social security, the public infrastructure, the education and training system, the quality and motivation of employees and environmental aspects play a major role in the company's location decisions.
Innerhalb der EU hat sich gezeigt, dass vor allem neu beigetretene, wirtschaftlich noch unterentwickelte Länder mit niedrigen Steuern, Löhnen und Sozialstandards um Unternehmensinvestitionen aus den Nachbarländern werben. Wenn die übrigen EU-Länder mit noch niedrigeren Steuern usw. reagieren, könnte ein ruinöser Standortwettbewerb in Gang gesetzt werden. Kritiker fordern deshalb unter anderem eine Tax harmonization in der EU.
Third countries outside the EU often offer higher subsidies for large-scale investments than the EU states are allowed under European state aid law. The Federal Government would like exceptional regulations in order to be able to counter such distortions of competition. However, a subsidy race in the international competition for locations should be avoided.
See also "Location debate"
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