Competitiveness

Competitiveness

Although many emerging economies have been trying to catch up, Germany has in recent years been able to maintain its strong position in world markets. Its market share of world exports is now – and has been since the early nineteen nineties – just over 9 %.

The success of German companies can primarily be ascribed to technically outstanding products, the mastery of complex processes, a high level of innovation and good marketing of the advantages they offer. In order to survive in global markets, however, firms need attractive economic conditions where their production facilities are located, including extensive public infrastructure, simple taxation and an efficient social welfare system.

One of the most important factors in locating production facilities is labour costs. It is true that in recent years the increase in labour costs in German industry has been moderate. Due to the dramatic hike in the first half of the nineties, however, Germany continues to be one of the most expensive business locations in the world. German companies partly make good the disadvantage of high labour costs by achieving higher productivity than their foreign competitors. Higher prices can be justified by better quality and more innovative products. It is thus all the more necessary for a high-wage country like Germany to maintain its competitiveness by continuous improvement in the fields of education, science and research.

Jürgen Matthes

Jürgen Matthes

Head of the Research Unit International Economics and Economic Outlook

Tel+49 221 4981-754

Mailmatthes@iwkoeln.de

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Christoph Schröder

Christoph Schröder

Senior Researcher for Labour Costs, Working Hours, Income Distribution

Tel+49 221 4981-773

Mailschroeder.christoph@iwkoeln.de

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