Innovation and exports keep Germany competitive on a global scale.
The German Annual Economic Report 2007 states that the economy was on a powerful upswing last year and along with the stimulus from foreign trade and domestic demand, was showing positive growth.
According to experts, world trade will remain dynamic, and this will continue to benefit the German export industry.
"For centuries Germany has been regarded as the land of poets, thinkers and engineers. Inventions such as the automobile by Carl Benz and Gottlieb Daimler to MP3 files by Karlheinz Brandenburg originated in Germany. That is one of the reasons why today, Federal President Horst Köhler calls our country the land of ideas," says Klaus-Peter Brandes, German ambassador to the UAE.
The good business conditions Germany offers are increasingly bearing fruit. This is indicated by in a clear improvement in the competitiveness of German firms. Companies are investing briskly and creating new jobs. There are signs that the upswing has continued in 2007 as well.
Germany's GDP is expected to grow by around 1.8 per cent this year and the number of people unemployed is likely to fall by about 480,000. Employment will continue to grow, rising by 300,000 on average for the year.
Private disposable income will rise, due to the increase in employment as well as the expected increases in earnings, and this will create an essential condition for growth in private consumption.
Germany is the world's leading exporting country. Exports form more than one third of the country's GDP. One out of every three euros earned by Germany is earned abroad. Every fifth job in Germany depends on its products and services selling well in global markets.
A wide range of imported goods and services adds to the choices for private households and increases the competitive edge of companies, which need to buy primary products cheaply.
According to the Invest in Germany website, "global trade and international investments are among the most important prerequisites for growth, employment and prosperity in Germany. More than any other country of comparable size, German companies are interconnected with the international division of labour. Foreign trade is the driving force behind its economic relations abroad. Even in unfavourable world economic conditions, exports of goods and services have proven to be a pillar of support for employment in Germany."
The Ministry of Economics and Technology says that the level of the German industry's integration into international markets is increasing all the time. "This is also due to the European Union, the increasing globalisation of world markets, the opening of new markets and the increasing use of the euro as the currency unit of international trade. Increased competition in international markets and the rapid development of technology present a challenge to the German industry of maintaining and increasing its leading position in important sectors."
German creativity, dynamism and efficacy have placed the country among the leaders of the top industrialised nations. Experts say that the challenge now is to maintain this position. With a view to creating and maintaining jobs in Germany, companies must consolidate their international competitive edge. At the same time, Germany must continue to assert itself as an attractive location for foreign investors.
Its foreign trade policy remains of the utmost importance for the German economy, as it is intensely integrated into the world economy. This is one of the most important political issues and forms part of the political order created by a free and socially responsible market economy and the global economic system.
Foreign trade policy must also strengthen the competitive situation in the world markets, in particular of small and medium-sized businesses. The efficiency and competitiveness of German industry also form a significant base for Germany's foreign relations. Trade and economic links create confidence and thus help stabilise international relations.
Important sectors
The most important sectors of German economy are automobiles, with sales of 227 billion euros (about Dh1,186 billion) and 777,000 employees, followed by electrical engineering (152 billion euros or about Dh792 billion and 799,000 employees), mechanical engineering (142 billion euros or about Dh738 billion and 868,000 employees) as well as the chemical industry (113 billion euros or about Dh587 billion, 429,000 employees), according to the 2006 edition of Facts about Germany.
German industry is diversified and in many sectors it is a global leader. Germany is the world's third largest automobile producer, with more than 70 per cent of vehicles produced intended for export. Machine and plant construction, in which most German industrial undertakings are involved, is also of outstanding international importance.
Germany is also a world leader in the chemical industry. Furthermore, among Germany's most innovative sectors with above average growth rates are those of technologies for the use of renewable energy as well as information technology and bio-technology.
"The glory of German industry is not in the big firms that are well known around the world, such as Daimler, Volkswagen, Siemens or Bayer. The small and medium sized firms constitute what the Germans call the Mittelstand. Although that term has political and social as well as management connotations, it has been widely accepted to mean companies that employ fewer than 500 workers.
Such firms constitute 98 per cent of German companies, hire 80 per cent of all employees, are responsible for a significant share of exports, and provide one of the firmest foundations of the middle class," says a spokesperson of the German Industry and Commerce Office in conjunction with the German Business Council in Dubai.
The service sector is the driving force of growth and employment, as well as of business start-ups. In most developed economies, more than two thirds of economic activity is concentrated in the service sector. The information and technology sector has swiftly become the driving force of the service sector and the market is currently worth 134 billion euros (about Dh697 billion). Today, Germany is the biggest mobile phone and Internet market in all of Europe.
Innovations
Consistently registering more patents than any other EU (European Union) country, Germany is the engine of innovation in Europe, according to the March-April 2006 edition of Invest in Germany. In the European Commission's latest survey of innovative performance, Germany is the only large EU member state to be classified as a 'leading country' while Britain, France and Italy are described as places with only 'average performance.' Overall, the 'Innovation Scoreboard 2005' ranks Germany fourth in Europe. Germany also displayed 'above average' performance in several key areas of innovation.
The latest report shows Germany rising in the overall ranking. Particular praise is reserved in the report for the country's strengths in knowledge creation, innovation and entrepreneurship, applications and intellectual property.
The survey also points out that Germany is performing above the EU average in several important fields such as high-tech services, high-tech exports and employment in medium-high and high tech manufacturing.
The Deutsche Energie-Agentur GmbH (dena), the German energy agency, estimates that power generation from gaseous biomass has been greatly expanded in Germany in the last few years, and has developed into its own independent sector within the fast growing bioenergy industry.
By the end of 2005, 2,700 biogas systems were installed in Germany, with an overall electrical capacity of 650 megawatts. The German Biogas Association estimates that by 2020, this capacity could go up to 9,500 megawatts.
Germany is the world leader in the biogas technology sector. German businesses offer a range spanning the entire value chain, from designing and building biogas systems to operating and maintaining them.
Thermal utilisation of sunlight is a technology that has been proven for decades and is a permanent component of the heating systems in millions of homes throughout Europe. At the end of 2006, German roofs boasted just less than 6.7 million square metres of collector surface with a heat output of 4,700 megawatts.
Four per cent of German homes use environmentally friendly, sustainable solar thermal energy. This saves 270 million litres of heating oil every year. The German government, too, supports the expansion of solar thermal energy use with various promotion programmes.
Investors receive grants and low-interest loans for small systems, while the installation of large solar thermal systems for local heat supply is supported by a pilot and demonstration programme.
Life in Germany
According to Facts about Germany, Germany has one of the highest standards of living in the world. The UN's HDI (Human Development) Index shows Germany is one of the most developed countries in the world in terms of life expectancy, degree of literacy and per-capita income.
Women now account for 45 per cent of those in employment — in Eastern Germany as much as 47 per cent. But the trend is veering towards working fewer hours as 7.2 million people work part-time in Germany. On average, private households in Germany have 2,820 euros (about Dh14,668) in monthly income at their disposal.
Germans spend most of their money on accommodation, followed by cars, food and drink. Sport is very popular, with around 90,000 sports clubs with 27 million members. Soccer is the most popular sport — with 26,000 clubs and 170,000 individual teams. The German Soccer Association is the largest individual body in the German Sports Federation.
