Effects of the financial crisis on the German construction sector and surrounding Eastern European countries' SMEs

The main goal of the paper is to highlight that the construction industry is a rather substantial pillar of national economies, through which it is a significant contributor to the economy of the European Union (EU). Its role is not only to generate gross domestic product (GDP), but it also has an indirect effect on the labour market and social welfare. It has a multiplying effect: one job in the building industry creates at least two additional jobs in other fields.

Another substantial trigger of the construction industry is the desire to own a flat, which became an important part of the German dream subsequent to the crisis. It is not only important for consumers, but also for all other sectors of the economy.

The construction industry with its general demand is pulling the whole industry forward and therefore it is heavily supported by the government which is interested in building new flats.

According to my initial hypothesis, the volume of the German construction industry has been growing since the crisis and the significance of Eastern-European construction entrepreneurships has increased to the same extent

As the methodological background, I attempt to analyse the pace of the German construction industry with linear regression. Parallel to that, I would examine the expansion of Eastern-European entrepreneurs with factor analysis and principal component analysis.  Based on the results I am able to set up a forecast/ trendline of the future performance of the German construction industry. 

Key words: building industry, Germany, building, taxation, Eastern-European construction entrepreneurships,

JEL Classification: O 32 Management of Technological Innovation and R&D