Subsidies granted by German states (Länder) and municipalities are substantial and amounted to more than € 70.6 bill. in 2001. Thus, states’ expenditures for subsidies exceeded half of total wage tax revenues (after deduction of child allowances) in Germany or 3.4 per cent of German GDP. States’ subsidies are far from evenly distributed in regional and sectoral perspective. For East German states, subsidies per inhabitant are twice as high as in West German states, excluding city states. With respect to sectoral decomposition, subsidies are granted mainly for branches suffering from economic crisis or not being subject to international competition.