A €10bn Chip Plant and a 43% AfD Poll: The Real Investment Risk in East Germany

A €10bn Chip Factory Meets a Political Divide in Saxony-Anhalt

Just as one of the largest private investments in eastern German history is taking shape—a €10bn chip plant in Dresden—the political landscape a hundred kilometres west is shifting. In Saxony-Anhalt, the AfD is polling at around 43 percent ahead of the state election. The proximity of the two developments frames a Handelsblatt commentary arguing that the region's biggest economic threat is not a lack of capital but a weakening of the civil society that makes locations attractive.

The commentary cites a survey by the German Economic Institute of 65 local economic development officials. More than 80 percent said the AfD's strength is a risk for their location. Not one respondent saw an opportunity. That is unusual because economic development officials are not known for political commentary, and their unanimous framing suggests the issue is already part of site-selection conversations.

Labour market researchers at the IAB have measured how xenophobic attitudes reduce the in-migration of workers, both from abroad and from within Germany. Separately, research covering 51 populist governments since 1900 puts the economic cost at around ten percent of output after fifteen years. The commentary's point is that risks are not yet damage, but they can be managed, much as building in a floodplain requires building a dike. In this analogy, the dike is local civil society: associations, advice centres and youth work.

The article's recommended investment is therefore not another plant but a donation to the local organizations that make regions livable for skilled workers and less fertile for extremists.

What the Data Shows About Populism, Migration and East German Locations

The argument rests on three distinct findings, each with different implications for companies.

The IW survey: a political risk with no upside

Among the 65 economic development officials surveyed, more than 80 percent view the AfD's rise as a risk and none as an opportunity. That matters because these officials are typically the first point of contact for investors weighing locations. If even the promoters of a region see political risk, then external investors are likely to price it in or avoid certain areas entirely.

The IAB finding: xenophobia works against the labour market

The IAB research shows that regional xenophobic attitudes slow the arrival of workers from abroad and from other parts of Germany. For a region trying to staff a major industrial investment and its supplier network, this is a direct operational constraint: capital is mobile, but skilled workers have choices about where they live.

The historical record: populist governments leave a measurable bill

The cited research on 51 populist governments since 1900 estimates a cost of about 10 percent of economic output after 15 years. That is a long-term figure, but it supports the commentary's framing that political risk is not abstract; it eventually shows up in growth, tax revenue and wages. The commentary does not claim the current AfD's state-level program would immediately produce such a loss, only that the historical pattern is a relevant benchmark.

What is less proven is whether donations to civil society can materially change the electoral trend. The article treats this as risk management rather than a guaranteed political counterweight—an investment in livability and community infrastructure rather than a direct campaign intervention.

What Employers and Investors in Eastern Germany Can Do Now

• Treat local political climate as a site-selection factor. The IW survey showing more than 80 percent of economic developers see the AfD as a risk—and none see an opportunity—means this is already part of their internal conversations, even if not in official reports.
• Factor migration risk into workforce plans for eastern German locations. The IAB research links xenophobic attitudes to reduced in-migration from both abroad and inside Germany, so recruitment and retention budgets should account for a smaller applicant pool in affected areas.
• Build support for the specific civil-society infrastructure the commentary names: local associations, advice centres and youth work. The article's central recommendation is that companies treat recurring donations to these groups as part of site risk management, not as charity.
• Use the historical benchmark in board discussions. Research on 51 populist governments since 1900 suggests a long-term cost of around 10 percent of output after 15 years; when weighing a 10-year investment horizon, that is material even if the near-term impact is uncertain.