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IW-Trends No. 2 16. June 2023 Hubertus Bardt / Michael Grömling Effects of Public Investment on Companies in Germany – Results of the IW Business Survey

Weak public investment activity in Germany has contributed to the low productivity growth of the last decades. Even maintaining the contribution to growth of state-owned capital stock at the already low level of the 1990s would have required an additional annual investment of some 45 billion euros.

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Effects of Public Investment on Companies in Germany – Results of the IW Business Survey
IW-Trends No. 2 16. June 2023 Hubertus Bardt / Michael Grömling

Effects of Public Investment on Companies in Germany – Results of the IW Business Survey

Hubertus Bardt / Michael Grömling German Economic Institute (IW) German Economic Institute (IW)

Weak public investment activity in Germany has contributed to the low productivity growth of the last decades. Even maintaining the contribution to growth of state-owned capital stock at the already low level of the 1990s would have required an additional annual investment of some 45 billion euros.

Public investment also stimulates private-sector activity, as the current IW business survey shows for Germany. Public-sector investment spending particularly stimulates demand, but also helps companies to cope with the upcoming transformation processes and improves production conditions (due to better infrastructure, for instance). Around half of the firms surveyed expect state investment to have these at least slightly positive effects. A third of corporate respondents also note an increase in their own investment activity as a result of improvements to the business environment brought about by public investment.

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Effects of Public Investment on Companies in Germany – Results of the IW Business Survey
IW-Trends No. 2 16. June 2023 Hubertus Bardt / Michael Grömling

Effects of Public Investment on Companies in Germany – Results of the IW Business Survey

Hubertus Bardt / Michael Grömling German Economic Institute (IW) German Economic Institute (IW)

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Why Do Companies Invest in Germany?
IW-Trends No. 2 11. July 2026 Hubertus Bardt et al.

Why Do Companies Invest in Germany?

The growth of Germany’s capital stock is slowing, as current investment increasingly fails to keep pacewith steadily rising disposals. In particular, private investment – which accounts for well over fourfifths of total gross fixed capital formation – has been alarmingly low in recent years.

Hubertus Bardt / Michael Grömling / Thomas Schleiermacher / Susanne Seyda IW

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IW-Trends No. 4 24. January 2026 Hubertus Bardt / Michael Grömling

Are the New Federal Government's Measures Having an Effect on Investment in Germany?

With German’s industrial crisis worsening in the wake of the COVID-19 pandemic and recent geopolitical upheavals, a huge investment gap has opened up.

Hubertus Bardt / Michael Grömling IW

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