Germany An Attractive Region For Investment : Germany

In The Midst Of Global Disruptions

The fall of the Iron Curtain, the radical transformations in Central, Eastern and Southeastern Europe, and German reunification have not only dramatically changed the political map of Europe. In addition, the Western world has been confronted with new and difficult challenges complicated by high unemployment and the necessity of social adjustment. The Federal Republic of Germany is no exception. Its position is unique in only one respect: It is the only country in the world having to cope with the problems of East and West simultaneously.

Germany is still a country with a high level of productivity, high incomes, extensive social benefits and widespread affluence. In order to maintain this high standard, it is essential to adapt to new developments in the field of science and technology and in world markets. An expensive industrial location can hold its own only as long as it is a good location - an exigency reflecting the fierce competition stemming from increasing world economic integration. At the same time, this integration offers new opportunities for satisfying people’s needs for goods and services economically, opens up new prospects in the world’s markets and affords new opportunities for employment.

The great opportunities afforded by globalization are accompanied by profound challenges as well, however. Throughout the world, the barriers for goods and services are becoming more permeable, communication and transport costs are being reduced, and production technology is becoming increasingly mobile. Hence in other parts of the world a high level of productivity can be achieved with the same technology as in Germany. As a result, wage differentials and load ratios for manufacturers have a greater impact than ever before. Since investment follows the best yield, Germany must make itself a more attractive location for investment. The parameters of international competition dictate the direction its efforts must take: More flexibility, greater readiness to work, more play for market forces and less state involvement are necessary in order to strengthen Germany’s position as an internationally competitive location for business and industry.