Economic Integration in the border region Saxony – Bohemia – Lower Silesia

Study commissioned by the Ostsächsische Sparkasse Dresden This project analyses, how the integration of the Czech Republic and Poland into the European Union affects the local economy in Saxony. A special focus is on the Saxon border regions and their economic integration. The study also gives an outlook on the future developments of economic integration in the border regions. In a first step, the study identifies the economic dimensions that are most relevant to regional integration across borders. The study focuses on the economic development and convergence, demographic trends, the labour market development and the patterns of trade between the regions. In addition to this macroeconomic perspective, the study also presents indicators on the development of the infrastructure as well as "soft" factors of location. The analysis is carried out on the country or state level. Depending on the availability of disaggregated data, descriptive statistics on the state level are also presented. The economies of the Free State of Saxony, the Czech Republic and Poland are highly integrated. Especially in foreign trade, the two bordering states are very important partners for Saxony. In addition to the importance of these two trading partners with respect to trade volume, the study highlights the patterns of specialization of the exports from and imports to the Free State of Saxony. While the Czech Republic predominantly demands metal ware from Saxon firms, glass and ceramic goods are exported to Poland. Saxon imports are charecterized by goods from vehicle manufacturing (Czech Republic) and data processing (Poland). Furthermore, the study indicates that Poland and the Czech Republic are important for foreign direct investments of German firms. Additionally, the existing cross-border infrastructure fosters continued economic integration.