Die Erwartungen der Wirtschaft für 2018

The German economy experiences a boom period. The leading economic research institutes upgrade their economic balance for 2017 to a growth rate exceeding two per cent and their forecasts for 2018 are equally positive. This optimism is widespread despite the UK’s exit from the EU, the protectionist tendencies and the difficult coalition-building in Germany. Technological innovations look ahead: manufacturing industry and trade sector have to react to digital transformation — i.e. electro-mobility, autonomous driving, the use of artificial intelligence and the spread of online trading.     

Der deutsche Leistungsbilanzüberschuss

Persistent and significant current account imbalances are often seen as one of the greatest threats to the global economy and a catalyst for protectionist tendencies. Germany is often criticised for running a high surplus. However, economists disagree about whether and to what extent the German current-account surplus is excessive and which policy measures could help to rebalance the current account. The authors argue that the German current-account surplus is a global phenomenon and hence requires in addition to economic policies that could stimulate investment activity in Germany an internationally coordinated approach. Taking into account the specific circumstances of a country, the WTO could act as an institutional framework to deal with global imbalances. In particular the WTO’s Trade Policy Review Mechanism could be further developed into a forum for coordinating members’ trade policy and for agreeing on reciprocal measures among members. The concrete design could be based on other established international mechanisms, such as the European Semester.     

The economics of German Unification reconsidered

The task of vitalizing the east German economy was severely underestimated—by politicians as well as by both the academic and the business community. Despite all the encouraging signs in east Germany, which undeniably exist, the process will take more time, require more money, and need more east German commitment than had widely been expected. But will fiscal backing alone be enough to vitalize the east German economy? What are the tasks ahead? Are they being tackled in an adequate way?     

Wo liegt der Kern des deutschen Mittelstands?

The Mittelstand is deemed to be a particular strength of the German economy. In international comparison, though, the contribution of small and medium enterprises (SMEs) to the economy is larger in many southern European countries. In this article, we argue that SMEs do not capture the core of the German Mittelstand, which instead lies in medium-sized companies larger than the current SME defi nition.     

Die Erwartungen der Wirtschaft für 2017

In 2016, Germany’s economic sectors had mixed fortunes. Gross domestic income increased by 1.8% in total. The prospects for 2017 are hardly better and subject to uncertainties. Above all the results of the US presidential election and Brexit give cause to fear protectionist tendencies, which are especially adverse for the German export-oriented industries. As a result the representatives of industry and services associations expect in 2017 rather modest growth rates.     

Ausländische Unternehmen und Übernahmeeffekte — neue Fakten für Deutschland

Surprisingly, relatively little is known about foreign-controlled firms’ activities in the German economy, although Germany is one of the most important FDI inflow countries worldwide. Recently, a new database on foreign ownership became available in the framework of German official statistics. The first econometric analyses of this database find evidence for the superior productivity and significantly lower profitability of foreign firms compared to their German counterparts. Furthermore, foreign takeovers are on average followed by much larger employment declines than German takeovers and show no productivity improvements.     

Lending to Small and Medium-Sized Firms: Is There an East-West Gap in Germany?

The financing of small and medium-sized firms is important for the catching-up of the East German to the West German economy since reunification. We explore whether it is restricted by unfavorable bank loan terms, using bank-survey data on lending decisions to small and medium-sized firms. A comparison of the terms of lending between the former East German and West German states yields a lending gap given by higher loan prices and collateral requirements in East Germany. This gap can be explained by differences in credit risks and lending strategies of banks.     

Der Vorsorge-Albtraum

Economic forecasts for the German economy expect German GDP to grow by less than 1% in 2013. The expectations of the industry are better still — only the representatives of the automotive industry think their future growth will not be higher than the German economy on average. The construction industry expects growth of 1.5% for 2013, due to a boom in new residential construction. The chemical industry had to hold its own in a difficult economic environment marked by weak global growth, the public debt and currency crisis in the euro zone, and — connected with this — the recession in Southern Europe. According to the recent outlook of the ZVEI, production (adjusted for price) of the German electrical and electronic industry will grow by 1.5% in 2013. Despite a difficult economic environment, the VDMA economists expect further growth in production for machinery and plant manufacturers of 2% in real terms for 2013. The main impulses will likely be set by foreign demand, especially from non-EMU member states.     

Foreign investments as a form of enterprise strategy

During the course of 1980 West German enterprises and private persons were responsible for approximately DM 8.16 bn in foreign investments. The sum total of German foreign investments has now reached a level of DM 74.2 bn. Both these figures indicate the increasing internationalisation of the German economy, at the same time suggesting that a considerable wealth of experience has been acquired by German firms already resident abroad, which could facilitate entry into foreign markets for possible investors. With this in mind a survey of German subsidiary companies in 17 countries was carried out, the aim of which was to obtain close to the market information on the problems, conditions and background details entailed in any particular undertaking abroad.     

Gemeinschaftsdiagnose im Frühjahr 2014

In 2014 and 2015 the German economy will, according to the joint economic forecast, be in an upswing that is mainly driven by strong internal demand. The institutes assess the risks coming from a possible slump of the Russian economy. Simulations with macroeconometric models show that Germany is more affected than other large economies in Europe such as France and Italy. The new minimum wage is a further risk for the German economy that it is difficult to assess. According to this forecast, the minimum wage will, when it comes into effect in 2015, mainly have an adverse effect on employment. Since in general only jobs with low productivity will be lost, the effect on production will be markedly smaller.     

Keynote Speech: Opportunities and Challenges for Mexico Today

Since its pre-colonial history, Mexico has demonstrated two contrary tendencies: the outward-looking, global trader and the protective, nationalist instinct. Today, the seven major constitutional reforms of the PRI government reflect the former. However, the teacher’s union, some presidential advisors, and the criminal justice system reflect a preference for the latter. The more progressive sectors of Mexican society assert the need to participate in the global economy, but latent protective and nationalist tendencies throw up challenges. This article examines several contemporary examples of each tendency and demonstrates how they coexist uneasily in modern Mexico.     

The creation of regional blocs in the world economy

International economic relations today show a rather pessimistic picture, with high non-tariff barriers, international trade frictions and a serious crisis in the GATT. The following article analyses present tendencies towards the creation of regional economic blocs and the threats to the world economy which these involve.     

Das Handwerk als Zubringer für Fachkräfte in das deutsche Innovationssystem

Vocational training in the German crafts sector traditionally provides skilled workers to other industries. It is shown that this fact contributes to the overall innovativeness of the German economy. Outside of the crafts sector, many employees with craft qualifications are found in highly innovative industries and innovative working environments. Especially in research intensive manufacturing companies, employees with craft qualifications are often engaged in activities that are characterized by a higher degree of complexity. This provides some evidence that vocational education and training in the crafts sector generates positive externalities that benefit other parts of the economy.     

Effects of German development aid on the internal economy

The importance of economic cooperation with the Third World for the internal economy is attracting increasing attention in the discussion of development aid topics in the Federal Republic of Germany¹. In this context it is of interest how the German development aid bears on the internal economy of the Federal Republic through feedbacks (in the form of contracts for German firms) from its bilateral and multilateral development aid payments. The following article presents the results of a relevant inquiry for the year 1976².     

Unwarranted final demand shocks of public deficits reductions in Germany

It has become common practice to blame the rapid collapse of the German economy after its having reached a 3% GDP growth high in the year 2000 on the oil-price shock, the burst of the New Economy bubble and the overall slowdown of the world economy around this time. However, the exceptional decline is striking if one looks at the other European countries, in particular the member states of the European Monetary Union. Is this decline in fact the result of the negative fiscal demand shock to the German economy caused by the use of the UMTS licence auction revenues to service outstanding loans?     

Europe and China in the Global Economy in the Next 50 Years: A Partnership for Global Peace and Stability

With huge debt levels, high unemployment and low growth, it appears that the European economy will continue to stagnate for the foreseeable future. China, on the other hand, has emerged as the largest trading nation in the world and become the second largest economy in the world. China’s economic rise presents a rare opportunity for Europe. However, to fully take advantage of these opportunities, both economies will need to overcome some economic frictions and trade protectionism tendencies.     

Dazing Diversity: Investigating the Determinants and Consequences of Decision Paralysis

This article makes new contributions to the assessment of negative effects on consumer choice behavior due to high product variety by (1) developing a holistic framework to identify the determinants and, for the first time, consequences of decision paralysis; (2) introducing a novel construct, namely, tendencies toward paralysis, that refers to the extent of decision makers’ preference (a) to maintain the status quo, (b) to omit, and/or (c) to delay choice, as well as providing an appropriate measurement model incorporating these three dimensions of decision paralysis that previously have been analyzed only separately; and (3) analyzing potential moderating effects of decision makers’ predisposition toward maximizing on the proposed model. The developed structural equation model as well as the conceptualization and operationalization of the novel construct are verified using data from the German cellular phone market. The model constructs of preference uncertainty and anticipated regret are evidenced to be the fundamental drivers of the formation of tendencies toward paralysis. In this context, the characteristics of variety under consideration—number, alignability, and complexity of alternatives—turn out to be appropriate parameters in avoiding decision paralysis. Moreover, a significant negative relationship between tendencies toward paralysis and subsequent customer satisfaction points out the importance of these findings for future research and business practice.     

The transformation of the eastern German economy

The eastern German economy has experienced a great deal in the five years since German reunification: an unexpectedly profound collapse following the Monetary, Economic and Social Union of July 1990; a massive loss of jobs with resulting social and political consequences; and an increasingly stable economic recovery. In which branches is recovery most dynamic? Where does the structural transformation seem to be leading? And which branches have the best chances of self-sustained growth in the future? This short analysis attempts to answer these questions, to demonstrate the different trends among the branches of the economy and thereby to underscore the differentiation within the economic transformation process in the new Länder.     

Das deutsche Russlandgeschäft im Schatten der Krise: gefährliche Abhängigkeiten?

In view of the Russian annexation of Crimea and its ongoing efforts to destabilise Ukraine, political decision-makers in the EU and the US are considering economic sanctions against Russia. The article analyses whether the German economy would be affected by restrictions on trade and investment relations. As a result, German exporters would suffer from restrictions on business relations with Russia, but they would be able to compensate for possible losses. Russian gas export interruptions, however, would be a more severe problem. Due to Russia’s dependence on revenues from the export of natural resources as well as on technology imports from Western countries, the Russian economy would be hit particularly hard.     

German Direct Investment in the UK, 1871–1918

This article examines German direct investment in the United Kingdom between 1871 and 1918. It is based on a new databank encompassing 179 empirical cases of FDI in sales subsidiaries, production units and service sector companies during a period when Anglo-German trade was intensive. FDI was growing as well, due both to the increasing competitiveness of German companies and to rising British non-tariff barriers to trade. German FDI in Britain is put into perspective by comparing it with German FDI elsewhere and with other FDI in the UK. Against this background the article ascertains from a German home country perspective what shape and extent investments took. Investments originating from 14 different branches of the economy are analysed according to type of investment, capital invested, branch, products, legal form chosen, date of entry, and location in the UK. The determinants behind investments are examined, and German FDI in this period is shown to be multi-causal.