Policy analysis in the German Länder is above all the business of Länder ministries, Länder audit offices and parliamentary research units. Ministries may hire the advice of private consultancies. They may also listen to lobbyists – some of whom have their own think tanks – and to the representatives of institutions legitimised by social corporatism, such as Chambers of Commerce. By policy analysis, we refer to policy input at large, although we place special emphasis on formal and informal policy advice as provided by a number of institutions.

Agenda-setting and policy analysis under institutional restrictions

All German Länder have the necessary institutional prerequisites for identifying political challenges, the financial means to work with experts and the ability to organise epistemic communities. Their governments are responsive to regional problems. They plan and organise political processes and evaluate alternative strategies. More than in decentralised forms of federalism, however, the German Länder are restricted in their control of the political agenda in Germany's unitary federalism. Policy analysis on the Länder level is therefore focused on a rather narrow range of topics. Furthermore, it tends to suffer from a limited choice of alternatives, especially when institutional obstacles, as is the case with European Union (EU) subsidy control, for example, or the imperatives of Germany's cooperative federalism, force Ländergovernments to comply with rules outside their jurisdiction (Sturm, 2006).

Controlled agenda-setting in German federalism takes several forms. A non-institutionalised instrument of nationalised agenda-setting in the Länder is party politics (Schmidt, 1980). Länder parties have recently won greater freedom to develop their own political initiatives and to put Länder interests before the interests of their national party organisations (Detterbeck and Renzsch, 2008, p 52). In addition to informal restrictions to political choice on the Länder level, there are two important formal restrictions: federal and EU competences. In Germany`s brand of cooperative federalism, which is anchored in a complex universe of interlocking policy-making involving the federal and the Länder levels, the Länder have lost most of their autonomy, even with regard to taxing and spending. They have no power to legislate in matters of taxation as this is a federal responsibility, and can only veto new legislation in the Bundesrat (the legislative body representing the 16 federal states).