Regional economic study of a large-scale settlement in Wiedemar

Task

As part of a regional economic study, Fraunhofer IKTS analyzed the impact of a potential large-scale settlement based on a hypothetical electric car factory, including battery production, in the planned industrial development area of Wiedemar. The focus was on the regional economic and fiscal effects that are significant for the municipality of Wiedemar and the district of North Saxony. The results of the study were to be communicated in a clear and transparent manner to the municipality and its residents. By presenting the potential economic impact, the aim was to show local people the opportunities that such settlements could bring and how the planned industrial development area would contribute to the economic development of their municipality and the region.

Approach

The study was conducted using an input-output model regionalized at the district level. This model determined the indirect and induced economic effects resulting from the settlement. Fraunhofer IKTS considered both the value added and the employment generated by suppliers and the consumption of employees. In addition, the tax revenue of the municipality of Wiedemar was estimated. Trade tax, income tax allocation, and property tax were analyzed, taking into account the allocation mechanisms of the Municipal Finance Reform Act.

The modeling includes three scenarios to address the uncertainties of the forecasts and enable a realistic assessment of the results.

Result

The modeling shows that the exemplary establishment of the electric car plant would deliver considerable economic added value for the region. A significant increase in regional value added and the creation of numerous jobs are forecast. The average annual tax revenues for the municipality of Wiedemar, mainly from trade tax, are considerable. This revenue offers the municipality economic opportunities and scope for action.

The economic modeling determines the added value of such a settlement. The preparation in the form of a short regional economic study as a communication medium provides the municipality with a decision-making aid for questions of location development and economic promotion.