Shocks to the system: The German political economy under stress

Published

Journal Article

The German economy is recovering hesitantly from the sharp post-unification boom and recession. Two features of recent West German performance are novel: there has been an unprecedented loss of jobs in industry, and manufacturing profitability has been pushed to its lowest level ever and is now low relative to other OECD economies. Serious problems with labour costs and innovation would be expected to show up in a weakening in the trend of export performance. That this has not yet happened is the consequence of the existence of an apparently robust innovation system which enables companies to pursue high quality incremental innovation strategies. However, the experiment of transferring the West German model to the East has proved extremely costly and has not so far established the basis for self-sustaining growth. Problems in profitability, investment and employment in West Germany reflect the failure of the bargaining system-unions, employers, Bundesbank and public sector-to negotiate the sharing of the burden of unification.

Full Text

Duke Authors

Cited Authors

  • Carlin, W; Soskice, D

Published Date

  • December 1, 1997

Published In

Volume / Issue

  • 159 / 1

Start / End Page

  • 57 - 76

Electronic International Standard Serial Number (EISSN)

  • 1741-3036

International Standard Serial Number (ISSN)

  • 0027-9501

Digital Object Identifier (DOI)

  • 10.1177/002795019715900104

Citation Source

  • Scopus