Market > Germany > Competitiveness
A growing number of German firms have moved their production activities to other countries in recent years. Does this speak against Germany as a location for business and industry? The answer is no. As scientific studies show, investment follows the markets. And as a rule, it is cheaper to produce on location: Customs duties and transportation costs can be saved, and exchange rate risks eliminated. Adjusting to the global market is the sign of a strong, rather than a weak, economy.
Why do foreign corporations invest comparatively less in Germany? The answers most often given are Germany s high wages, ancillary wage costs and taxes. Compared to its international competition, Germany has relatively high labour costs per hour which are greater when social security contributions are added. However such costs are largely offset by much higher productivity levels in German industry.
Among the leading western industrial nations in 1996, only the Netherlands can boast higher productivity rates. In the USA - one of Germany's major competitors - productivity was almost 25% lower than in Germany. In terms of per-capita productivity, Germany moved up from fifth to second place among the western industrialized nations between 1995 and 1996.
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