Why is Germany’s Manufacturing Industry so Competitive?

The German economy has been outperforming other member countries of the European Union during the recent recession and the still ongoing European debt crisis. The new Kiel Policy Brief by Federico Foders (Kiel Institute) and Manuel Molina Vogelsang (Fraunhofer) empirically analyses the trade and technology specialization and the price/cost performance of the German economy over the period 1990–2011. Their results confirm that Germany is specialized in medium-range technology products and show that quality in this segment is the main driver of Germany’s international success.