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Economic Structure

Leipzig trade fair

Leipzig trade fair
(© Leipziger Messe GmbH)

The Free State of Saxony has a great and long-standing industrial tradition, building on its centuries-old textile industry and heavy industry based on mining. The Industrial Revolution took place on a broad front here as far back as 1830. Meissen porcelain was one of several reasons why Saxon products became known across the world. Technical development led to further fields of industrial activity in addition to the traditional textile manufacture, notably mechanical and electro-technical production.

Saxon enterprises were always at the forefront as Germany’s industrialisation developed in the nineteenth century and the start of the twentieth century. The predominance of the industrial sector remained after the Second World War. In the GDR, the three Saxon districts were responsible for 40% of the total GDR production. The conversion to a market economy did, however, largely undermine the traditional economic structures which had been maintained in the GDR over a long period of time, and many uneconomic jobs were lost. Since then, Saxony has been able to restore its industrial tradition and establish itself as a competitive base for industry.

There are now five distinguishable economic sectors in Saxony with three urban centres as engines for the economy. Micro-electronics and electro-technical industry is concentrated between Dresden and Freiberg (Silicon Saxony). Leading firms in the industry, like AMD, Qimonda, Advanced Mask Technology Center, Siltronic and SolarWorld AG, have settled here. The economic sector of north-west Saxony includes the trade city of Leipzig, whic has established itself as the centre for media and financial services. The machine and automotive industries have traditionally concentrated on the central Saxon agglomeration around Chemnitz and Zwickau. These centres are increasingly developing regional networks. Examples include micro-electronics firms in Dresden and Freiberg, automotive and machine tool firms in Chemnitz/Zwickau and the concentration of media in Leipzig. Eastern Saxony, the Ore Mountains region, and the upper Vogtland, which tended to be monostructural in the GDR, have had significantly greater difficulty in achieving economic change and developing a modern economic profile.

Small businesses are an important part of the Saxon economy. In 2007, more than two thirds (68%) of the 114,459 enterprises and state institutions (with staff liable to national insurance) had fewer than five employees, 21% had six to 19 employees and only 2% had more than 100 employees. In total, over 96% of the businesses employed fewer than 50 staff (covered by national insurance). Self-employment is growing steadily, with an increase in the share of the workforce in Saxony from 4.6% in 1991 to 11.5% in 2007, the largest share in any of the new German states.

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