Baden-W"urttemberg: productive W. German state earns its praise

Martin Herzog exudes the cheery confidence of an economics minister whose state has an even trade balance with Japan and an unemployment rate of only 4.8 percent. In between trips to carry the flag of commerce to Peking, Moscow, Boston, and Orange County, Calif. he took a few minutes out in his home city recently to laud the success of West Germany's southwest state of Baden-W"urttemberg for an American reporter.

The state's citizens are legendary for their hard work. There's a good mix of big with medium and small businesses. And even before it became a fad, this state was pumping money into high-technology research. The result is not only a good export record, but also vigorous foreign investment that in 1983 ran to about 14 billion deutsche marks ($5 billion) incoming, and an equal amount outgoing.

Last year the state pulled even in the 2.1 billion marks ($1.2 billion) export-import balance with Japan. West Germany as a whole runs an 18 billion mark deficit with Japan. The new West German industrial park that will open shortly in Yokohama, Japan will be populated to some 60 percent by Baden-W"urttemberg firms.

Equally positive is the domestic outlook for work. Not only is Baden-W"urttemberg's unemployment half that of the national West German average; more important, says Herzog, companies generated 60,000 new positions last year. That brought the level back up to the number of jobs that existed before a slump in the early '80s.

He interprets the trend as disproving the thesis that modern technology is a job eliminator.

Indeed, technology is the theme song both of Herzog and of Baden-W"urttemberg's Premier Lothar Sp"ath. The state's 500 annual graduates in ``Informatik'' - computer and information technology - are a main attraction to foreign firms thinking of locating here, and Baden-W"urttemberg is proud to host the European headquarters of Germany's Nixdorf computers, as well as of IBM. The state plows a lot of money into promoting technology. It encourages the kind of cross-fertilization between industry and higher education that is rare in Europe.

Herzog gives an example of a laser institute in Ulm that aims to help Baden-W"urttemberg's world-wide exporters of scalpels adapt to new medical technology. The institute is run jointly by the state, the university in Ulm, and two private companies. It helps the scalpel manufacturers who are themselves typical of the development of this region from a backwater whose main export a century ago was poor emigrants.

The same growth occurred with Black Forest cuckoo clocks; they evolved into the more substantial timepiece industry that still today helps Baden-W"urttemberg export almost a third of its total production. Automotive goods account for about a quarter of the state's annual 95 billion dm exports, engineering and machine building for another quarter. Electrical goods, chemicals, and textiles are the other main exports.

This state has also been key to the Soviet Union's experimental opening to the West. Out of the 10 joint ventures the Soviet Union is exploring today, five of the Western partners are from West Germany, and four of these are from Baden-W"urttemberg.

Herzog stresses the importance of preventing today's trade feuds from escalating to protectionism.

His state has done very well, even though the drop in the dollar in recent years has made German exports 70 percent more expensive than they were a few years ago. Its machine-tool industry has long enough lead times in contracts so that the full impact of a recent revaluation of the mark has been delayed. But the state's experience has shown that the high quality of its output guarantees that buyers are willing to pay higher prices. Last year the state enjoyed a 3.4 or 3.5 percent growth, but this year the growth will be less, and exports are not expected to grow at all. Even Baden-W"urttemberg's inventive entrepreneurs would not come out of a protectionist war unscathed.