MECKLENBURG-VORPOMMERN - Economy
Transition to a market economy required structural adjustment
The introduction of a market economy has produced profound changes in Mecklenburg-Vorpommern's economic structure, which have brought it much closer to the kind of structures found in western Germany. There are some striking similarities with its neighbour to the north-west, Schleswig-Holstein.
An exception is agriculture, where the large-scale structures inherited from the GDR have remained largely intact and have proved highly competitive. In 2001, nearly half (47%) of the land used for agriculture was farmed by 383 holdings with 1 000 hectares or more, while a further 23% was farmed by 443 holdings with between 500 and 1 000 hectares. Sole-proprietorship holdings with less than 100 hectares of land, which are typical of agriculture in western Germany, account for only 5.0% of the agricultural area. Agriculture is dominated by market crops. Animal herds have declined steeply in the wake of structural changes. At 42 head per 100 hectares, the cattle population density in 2000 was less than half that in western Germany (102 head per 100 hectares). Livestock production is therefore underdeveloped. Agriculture (including forestry and fisheries) continues to be a major employer, providing 4.7% of all jobs (2002), and about 10% in structurally backward Landkreise such as Demmin (11.0%), Mecklenburg-Strelitz (10.9%), Nordwestmecklenburg (9.2%) and Parchim (8.4%).
Many enterprises in the manufacturing sector proved uncompetitive, and the sector declined, with the result that it now accounts for little more than 10% of Mecklenburg-Vorpommern's employment and gross value added (2002; western Germany and Berlin: 21.5% and 23% respectively). In 2002, manufacturing and mining provided employment for just 28 persons per 1 000 inhabitants (compared with 83 in the "old" Länder), making Mecklenburg-Vorpommern the Land with the lowest industrial concentration in all of Germany. What has emerged is a structure dominated by small enterprises. In 2002, only three out of 720 enterprises employed 1 000 or more persons, while only five had between 500 and 999 employees, while about 600 employed fewer than 100 persons. The industrial landscape is dominated by traditional branches such as food processing (which accounted for 37.0% of the sector's turnover in 2002), the wood industry (7.3%) paper, printing and publishing (5.0%), glass, ceramics, the processing of stones and non-metallic minerals (4.6%), shipbuilding (10.9%) and other metal industries (manufacture of metal products: 6.4%; vehicle components: 3.9%). More technology-intensive branches such as chemicals (5.1%), mechanical engineering (3.6%), electrical engineering (5.9%), broadcasting and communications, medical, measuring, precision and process control equipment (2.7% together) are generally less important, which means that the industrial structure creates relatively little wealth.
The building industry expanded considerably thanks to the construction boom on the back of state subsidies in the first half of the 1990s, but subsequently descended into a crisis of adjustment. The number of workers employed in the industry increased by 46.0% between 1991 and 1995, but has since declined by 40.4% as overcapacity has been reduced. Despite this, the building industry continued to employ 10.5% of the workforce in 2002, compared with 5.5% in western Germany, and was therefore considerably overmanned.
The craft sector, which declined in the GDR, has regained its former role, although the craft sector of the building industry has had to reduce overcapacity.
The services sector has grown significantly in importance. In 2002, it provided 73.6% of all jobs in Mecklenburg-Vorpommern and generated 76.9% of its economic output. The boom in tourism and the renewed importance of the port economy have meant that trade, hotels and catering and transport now account for 19.1% of gross wealth creation, a similar percentage to the 20.8% in Mecklenburg-Vorpommern's western neighbour, Schleswig-Holstein. On the other hand, finance, leasing and letting, and business services, which mainly depend on the region's structurally weak industrial sector, are less developed (26.5% of wealth creation, compared with 31.3% in Schleswig-Holstein). On the other hand, the public and private services sectors (31.4%, compared to 23.8% in Schleswig-Holstein) are very much over-represented, due mainly to overstaffing in the public sector.
The region's business concentration (29 enterprises per 1000 inhabitants as of 2001) is 19.4% below the German average. The biggest businesses in Mecklenburg-Vorpommern are the ferry operator Scandlines AG, the NETTO supermarket chain, the shipbuilders Aker MTW Werft, Volkswerft Stralsund GmbH and Aker Warnow Werft GmbH, the Energiewerke Nord GmbH (decommissioning and dismantling of the Lubmin atomic energy plant near Greifswald) and the shipping company F. Laeisz GmbH.
The productivity gap: the main economic problem
The main agricultural products in 2002 were cereals (31%), milk (20%) and oilseeds (12%). With 8.0% of Germany's used agricultural area, Mecklenburg-Vorpommern produced 8.8% of the country's cereals and 19.7% of its rape in 2002. Mecklenburg-Vorpommern is home to 4.1% of Germany's cattle and 2.6% of its pigs, and accounts for 4.8% of its milk production, but only 1.8% of its meat production, with the result that Mecklenburg-Vorpommern's contribution to Germany's agricultural gross value added was just 4.9%.
Industrial output, including mining (2002: €7.4 billion) is dominated by traditional products and is not very diversified. In 2002, food and fodder products and beverages together accounted for 33.3% of output (including fishery products, which accounted for 1.7% of the total). Shipbuilding (11.6%), metal goods (6.4%), motor vehicles and vehicle parts, glass, ceramics, worked stones and non-metallic minerals (4.3% each) and wood (7.2%) together accounted for a further third of output. The share accounted for by technically advanced sectors such as chemicals (9.2%) communications technology/electronics (1.4%), medical, measuring, precision and process control equipment (1.1%), machinery (3.2%) and electrical equipment (5.1%), by contrast, is quite small. In 2002, the share of output destined for export was 18.0%, which does not represent a significant increase on 1991 and which was well below the 39.2% for western Germany.
Although exports more than doubled between 1991 and 2002, to stand at €2.1 billion, Mecklenburg-Vorpommern's share of German exports was just 0.3%. More than half of its exports in 2002 were accounted for by food products (36.7%) and water craft (17.0%).
Tourism has become a significant sector of the economy. The number of beds increased by one-half between 1992 and 2002, to 169 500, and the number of overnight stays from 6.7 million to 21.0 million. 58% of overnight stays were concentrated in the coastal resorts, including spa resorts. In 2002, Mecklenburg-Vorpommern once again recorded the highest tourist intensity of all Länder: about 12 000 overnight stays per 1 000 inhabitants, ahead of Schleswig-Holstein (7 300 overnight stays per 1 000 inhabitants). Experts estimate that economic activities related to tourism now account for about 10% of Mecklenburg-Vorpommern's gross value added.
Mecklenburg-Vorpommern's main economic problem (and that of the other new Länder) is the serious productivity gap with western Germany. By 2002, its productivity was just 71.9% of that in western Germany (including Berlin). While the productivity of the region's agriculture (including forestry and fisheries) has already far outstripped that in western Germany, all other major sectors are lagging seriously behind. Manufacturing productivity was only 62.3% of that in western Germany. Further increases in productivity will require more redundancies unless they can be achieved through above-average economic growth or unless new jobs are created.
Transport
The port sector is of particular importance in Mecklenburg-Vorpommern's transport system. The volume of goods handled in the Land's seaports increased again in 2002, to stand at 25.5 million tonnes, although the 17.3 million tonnes handled by the Port of Rostock did not quite equal the level of 20.8 million tonnes seen in 1989. Ferries to Denmark, Sweden and Russia carry one-third of the freight handled by the seaports (Rostock: 5.9 million tonnes, Sassnitz: 2.7 million tonnes).
1 054 274 vehicles were registered in the Land in 2002, including 891 000 private cars. This represents an increase of nearly 60% between 1990 and 2002, when the road network included 419 kilometres of motorways (1991: 237 kilometres).
No air freight has been handled at Mecklenburg-Vorpommern's airports over the decade.
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