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Germany's economy in crisis: Action needed now!
Study on Germany's competitiveness shows declining role in foreign trade and challenges from China.
Germany's economy in crisis: Action needed now!
In today's globalized world, Germany and the EU are facing new challenges in foreign trade. A current study by the Konrad Adenauer Foundation highlights Germany's competitiveness and shows that the role of the EU and Germany in global foreign trade is increasingly shrinking. Expert surveys from emerging and developing countries underline this development. More than a quarter of all jobs in Germany are dependent on exports, and despite the challenges, Germany remains a global leader in some areas such as energy and environmental technology, medical technology and the automotive industry.
However, the stagnation of growth figures in the EU and the longest recession since the founding of the Federal Republic are cause for concern. There is an urgent need for action to strategically realign foreign trade policy. Mohammed Baharoon, director of the Dubai Public Policy Research Center, describes trade relations between the Gulf region and Germany as a “one-sided love affair.” If Germany and the EU do not take action, partner countries could increasingly turn to China.
Competition from China
China represents a particularly big challenge. According to the Current research on China The country invests heavily in research and has shown an impressive increase in global innovation indicators. The pool of talented researchers is growing rapidly while the political situation in the country is becoming more authoritarian. The Chinese government is striving for dominance in key technologies and is actively intervening in science and academia, which poses significant challenges for German research.
The question of how a future partnership with China can be designed without endangering transparency and academic freedom is being intensively discussed. Approaches to organizing research collaborations, which are discussed in this context, are also relevant here.
Investments in future technologies
Germany is currently hesitant to invest in new technologies. Again Innovation indicator shows, private investments in artificial intelligence for 2023 in Germany will be just $1.91 billion, while China will have an impressive $7.76 billion. This discrepancy poses the risk that Germany will fall behind in the area of digital technologies such as biotechnology and artificial intelligence.
According to the Stanford AI Index Report 2024, Germany only ranks 7th among 35 economies surveyed for key technologies. Countries such as Singapore, Switzerland, Japan and China are increasingly overtaking Germany in areas such as digital hardware, production technologies and new materials. It is becoming clear: If Germany does not go on the offensive, there is a risk of a gradual lag that could have long-term effects on the location's competitiveness.