One of the main tasks of the promotion of economic development by the federal government is to provide assistance to the small and medium-sized companies. The aim is to reduce the competitive disadvantages of the small and medium-sized companies compared with the big enterprises. At the same time a contribution is to be made to efficiently combat unemployment by increasing the readiness to business start-ups and to prevent the risk of an insufficient adjustment to structural changes.

For this purpose, the following promotion programmes and individual assistance projects were launched by the federal government; BAFA makes a considerable contribution to their putting into practice:

An important task is the promotion of advisory services and training. Financial aid is granted for start-up counselling and general advisory services, e.g. issues of business management, adjustment to new competitive conditions and environmental protection. Furthermore, assistance is granted for information and training courses above company level with the aim to improve the productivity of already existing companies or to give information about business start-up.

Another important task is the promotion of national trade fairs. Small and medium-sized companies in the new laender get stallage grants at selected international and national fairs and exhibitions which take place on the territory of the Federal Republic of Germany and which are considered eligible for assistance by the Federal Ministry of Economics and Technology (BMWi). By the help of this programme BAFA makes an efficient contribution to the sales promotion of products from the new laender.

BAFA also renders administrative support to the participation of German companies from the old and new laender in selected fairs and exhibitions abroad. Taking part in the official participation of the government in trade fairs abroad means a considerable saving of expenses, good advertising and representation possibilities as well as organisational advantages to the exhibiting companies.

The government’s "Technology Participation Programme" (BTU) offers effective incentives to capital investment companies, other companies and private persons who are taking shares in firms to engage more than before in the development and start-up phase of small technology-based firms. If the investing company goes into default the government would bear part of the deficiency payment effected by out-of-court arrangement.

BAFA sees to it that the government’s interests are safeguarded in those out-of-court arrangements.

Furthermore, BAFA is in charge of important individual tasks of promoting the small and medium-sized companies by BMWA:

For instance, the Institut für Mittelstandsforschung (Research Institute for Small and Medium-Sized Companies) receives annual financial assistance in order to be able to fulfil its task to investigate the situation, development and problems of the small and medium-sized companies. In addition, BAFA supports the work of the Rationalisierungs- und Innovationszentrum der Deutschen Wirtschaft e. V. (RKW) (Rationalisation and Innovation Centre of German Industry) and of the Arbeitsgemeinschaft für wirtschaftliche Verwaltung (AWV) e. V. (Work Group for Economic Administration) by giving annual grants.

The Deutsche Zentrale für Tourismus e. V. (Central Tourism Office) receives grants to support its activities aimed at the promotion of tourism, especially international and national placement of Germany as an attraction for tourists.

By promoting the projects of the Deutsches Seminar für Tourismus e. V. (DSFT) (German Seminar for Tourism) being a central, branch-related and inter-company educational institute, the further training of professional and managerial staff in all branches of tourism is assisted.

In order to increase the productivity of small and medium-sized companies, BAFA grants financial assistance from BMWA’ s funds to cooperation meetings held between technical service companies and innovative firms with partners and research institutes from Central and Eastern Europe organised by several project sponsors on behalf of the government.

As part of a project promotion BAFA supports the activities of the Deutsche Seminar für Städtebau und Wirtschaft (DSSW) (German Seminar for Urban Development and Economy) by annual grants from BMWA’ s funds to contribute to the revitalisation of East German town centres.

Together with the laender and the Zentralverband des Deutschen Handwerks (Central Association of German Handicrafts), the government, through BAFA, participates especially in the maintenance of the Deutsches Handwerksinstitut (DHI) e. V. (German Handicrafts Institute) in order to increase productivity in handicrafts. Its purpose is to conduct scientific studies on specific issues, mainly in the economic and technical area, in order to promote German handicraft trades.

One of the projects supported by BAFA is the establishment, modernisation and equipment of vocational training centres above company level of the handicraft sector in the Federal Republic as a whole and of the manufacturing industry in the new laender. Of special importance in this respect is the modernisation and reorganisation of training facilities to become centres of specialised skill and technical competence and the equipment of technology transfer centres. In addition, the project is assisted by the laender, the Federal Ministry of Education and Research, trade corporations and the Chambers of Industry and Commerce as the local funding bodies.

Furthermore, BAFA gives annual grants to the Federal Award for Outstanding Innovation Results on the occasion of the International Handicrafts Fair in Munich as well as for the annual Competition of the Young Handicraftsmen on national level organised by the Stiftung für Begabtenförderung im Handwerk (Foundation for Talents Promotion in Handicrafts) and the International Professional Competition organised every two years.

In the case of the German industrial film award sponsored by the Federal Ministry of Economics and Labour, BAFA functions as an agency for the annual competition. The aim is to assist German short films dealing with issues of the modern industrial and service society in the Federal Republic of Germany.

BAFA also participates in the presentation of the German Shoe and Leather Award given as an incentive to increase the efficiency and competitiveness of the predominantly small and medium-sized German shoe and leather ware producers.

Other measures of economic and political importance

Apart from the promotion of small and medium-sized companies, BAFA administers other economic and political measures:

In accordance with the provisions of the film promotion law, BAFA issues certificates for cinema films (certificate of origin). This certificate is the prerequisite for a film producer to get financial assistance by the Film Promotion Agency and to utilize their film rights abroad.

On the basis of a NATO Security Investment Programme funded by all NATO states, BAFA publishes invitations to tender concerning projects carried out in a foreign NATO state. Besides this, it decides whether companies, which are established in a NATO country and want to participate in the bid, are qualified for the project’s implementation. In a nomination procedure BAFA names the qualified applicants for tenders to the Federal Army. The procedures are to support free competition.

In addition, BAFA is the accreditation agency and responsible for granting the attestation and certifying agencies the authority to check the procedures and methods of awarding contracts and issuing certificates within the area of application of the EEC Guideline 93/38.

Within the framework of the EU‘ s Regional Development BAFA is acting as the „paying authority“ of the government in assisting projects under the European Regional Development Fund (ERDF). It is involved in the flow of payments to the laender responsible for the projects, in the assessment of financial data for the ERDF and the exchange of data relevant for structural funds between the Commission and the laender. Furthermore, BAFA controls the implementation of projects of the Community Initiative Interreg in the transnational and interregional development.

BAFA was also assigned control tasks under the EU development programme Interreg III providing considerable financial means for the trans-European co-operation.

BAFA compiles the Statistics of the Joint Task “Improvement of the Regional Economic Structure” (JT). The purpose of the JT is to promote projects undertaken by the manufacturing industry as well as related infrastructure which strengthen the economic competitiveness and create new or secure existing jobs. On behalf of the laender, BAFA records all JT projects eligible for promotion. The statistics show for each promoted investment project the funds granted by the federal government as well as those granted by the laender governments. They also show the regional and structural distribution of the funds. The purpose of the statistics is mainly to analyse the effects of the respective investment promotion measures (success analysis).

Within the framework of the Non-Ferrous Metal Statistics, BAFA collects data on production, consumption and stocks in all relevant companies in the Federal Republic of Germany. The results serve economic and political purposes and the presentation of the economic activity.

By indexation control BAFA makes an important contribution to the maintenance of stable prices. Price clauses operating automatically to safeguard the value of pecuniary debts enhance inflationary tendencies. For this reason, their agreement is generally prohibited in most areas of the legal system. Exemptions to the ban on indexation are especially possible in longterm contracts. In these cases it is possible to link the amount of pecuniary debts to an index. A typical index frequently used in practice is the cost-of-living index of all private households in Germany. BAFA decides upon application whether such clauses can be authorised in an individual case. The licensing procedure does not apply to long-term commercial lease contracts; in such cases the stable value index clause shall be considered authorised by law under certain conditions. Another exemption to the ban on indexation are money and capital transactions, not including consumer credit agreements, as well as foreign trade contracts and leasehold contracts with a minimum term of 30 years.

As a result of the new organisation of consumer protection in public health, BAFA took over tasks arising from the Law on Foodstuffs and Articles Required for Human Needs (LMBG) on 1 November 2002. It declares its agreement with exceptional rules and general orders referring to foodstuffs and articles required for human needs that have not yet been permitted in Germany or meet the European provisions and requirements, but do not fully comply with the German rules. BAFA has to asses the economic aspects of the exceptions and, in particular, consider possible competitive advantages of disadvantages of German manufacturers.