Since German unification, assessments of the German economy have swung from “sick man of the euro” in the early years to dominant hegemon of late. I argue that the German economy appears strong because of its recent positive performance in two politically salient areas: unemployment and the current account. A deeper assessment reveals, however, that German economic performance cannot be considered a second economic miracle, but is at best a mini miracle. The reduction in unemployment is an important achievement. That said, it was not the product of faster growth, but of sharing the same volume of work among more individuals. Germany’s current account surpluses are as much the result of weak domestic demand as of export prowess. Germany has also logged middling performances in recent years regarding growth, investment, productivity, and compensation. The article also reviews seven challenges Germany has faced since unification: financial transfers from west to east, the global financial crisis, the euro crisis, internal and external migration, demographics, climate change, and upheavals in the automobile industry. German policy-makers managed the first four challenges largely successfully. The latter three will be more difficult to tackle in the future.
Stephen J. Silvia
German Reactions to Brexit
consistently noted that they do not want to be punitive and they are keenly aware of the negative economic consequences for the German economy. They have also stuck steadfastly to the mantra: “’We divorce first, and then we figure out how to put things back
Stephen J. Silvia
This article investigates the progress that the eastern German economy has made since unification in two areas: unemployment and output. It finds that unemployment has remained persistently higher in eastern than in western Germany and output levels have remained extremely uniform across the eastern states. Keynesian and neoclassical economists have proposed differing explanations for the endurance of high unemployment in the East. The latter have the more convincing argument, which blames high initial wages in eastern Germany for producing a labor "trap," but this account is not without flaws. The best explanation for output uniformity is the content and volume of public investment in eastern Germany since unification. Public policy in the years immediately following unification is in large part responsible for both outcomes. Economic modeling indicates that wage subsidies targeted at low-income employment would be the most effective means to break the current high-unemployment equilibrium in eastern Germany, but the political barriers to adopting such a policy are just as formidable as they were a decade ago, when such a policy was briefly considered.
Over the past decade Germany has had one of the most successful
economies in the developed world. Despite the ongoing Euro crisis unemployment
has fallen below 7 percent, reaching its lowest levels since German
reunification in 1990. Germany’s youth unemployment is among the
lowest in Europe, far beneath the European average.1 One of the most
important engines of the German economy today, and in fact throughout
the twentieth and twenty-first centuries, has been its export sector. As Ludwig
Erhard, West Germany’s Economics Minister during the Wirtschaftswunder
of the 1950s remarked: “foreign trade is quite simply the core and
premise of our economic and social order.”2 According to various estimates,
today exports and imports of goods and services account for nearly a half of
German GDP—up from only a quarter in 1990. Germany is one of only three
economies that do over a trillion dollars worth of exports a year, the other
two being the United States and China.
Pegida’s Community Building and Discursive Strategies
a paradox in that they are anti-modern identitarians pining for a mythic Central Europe, regressively protectionist towards the German economy in their demands to close the borders to international trade, exit the Euro zone, and expel refugees, even
The history of the Federal Republic of Germany is closely connected with economic achievement. Enjoying a striking economic recovery in the 1950s, the FRG became the home of the “economic miracle.” Maturing into one of the most powerful economies in the world, it became known as the “German model” by the 1970s. Now, however, the chief metaphor for the German economy is “Standort Deutschland,” and therein lies the tale of the new German problem.
Mark Huberty, Johns Hopkins School for Advanced International Studies, The Johns Hopkins University The development of the high-technology startup sector in Germany is critical for the adjustment of the German economy to growing international competition in traditional industrial sectors. The article explores whether changes to the German venture capital financing sector in the period 1995-2005 indicate an improved development path for high-technology startup firms. Based on the volumes and structure of venture capital investments during this period, I conclude that the venture capital sector has undergone substantial change in favor of financing and supporting high-technology startup firms. However, small firm behavior suggests that even with a changed venture capital sector, the overall regulatory structure of the German economy will result in lower rates of firm success than otherwise would be expected from a resurgent venture capital market. The policy implication is that, without additional regulatory reform favoring small, high-technology enterprises, the transformation of German industry will continue to be constrained.
Farming the Eastern German countryside in the animal welfare era
Amy Leigh Field
Animal husbandry, a major part of the contemporary German economy, is the subject of politically and morally charged discourses about the effects of the industry on the nation's landscape and its role in economic globalization. German politicians and activists often discuss industrialized animal husbandry practices as abusive and polluting. This article analyzes how these debates are imbricated in forms of concern about nonhuman animals that tend to be differentiated geographically by urban-rural boundaries. I argue the privileging of animals as moral entities causes interpersonal friction between those who rely on animals for a living and those who do not, and expresses fundamental tensions about the rural landscape as a space of industrialized agricultural production, as opposed to a space dedicated to the conservation of the natural environment.
Since German unification there have been dramatic and highly visible changes in the German financial system and relations between banks and firms in Germany. The traditional Hausbank system has weakened, as securities markets have become more important for both borrowers and savers. The demands of financial investors on how German firms manage themselves have—for better or worse—become increasingly influential in this time. In this article, I advance the thesis that bank-industry relations in Germany became increasingly differentiated, with one set of firms moving into an institutional environment readily characterized as market-based finance. Meanwhile, most German firms remain in a bank-based environment that, while not quite the same as the Hausbank model that prevailed at the time of unification, is still easily recognized as such. These changes in the financial system have had numerous consequences for the German economy, including increased pressure on firms to make greater profits and increased pressure on labor to limit wage gains and make concessions in the interest of corporate competitiveness.
Christopher S. Allen
For much of the past two decades since unification, the literature on the German economy has largely focused on the erosion of the German model of organized capitalism and emphasized institutional decline and the corresponding rise of neoliberalism. The first part of the article analyzes the strains unification placed on German economic performance that caused many observers to call for modification of the model in a more neo-liberal direction. The second part takes a different focus and lays out the main rationale of the paper. It inquires why such a coordinated market economy was created in the first place and whether a renewed form of it might still be useful for Germany, the European Union, and other developed democracies in the early twenty-first century. The third section articulates the origins of the institutional and ideational components of these coordinated market economy models, during both the Bismarckian and Social Market Economy periods. The final portion inquires whether the failure of the contemporary liberal market economy approach in the wake of the worldwide financial crisis and severe recession represents a possible opening for the creation of a third coordinated market economy not only for Germany but for a redesigned European Union.