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Why is Germany so successful in exporting?
- stong businesses
- wage restrain in recent years
- geograpgical location in Europe (central)
German Economic Style
social market economy
What are the Mittelstand?
- the small and medium size businesses that produce as much as 70% of German output
- between 20 and 500 employees
Are German wages high?
yes, average wages in Germany are some of the highest in the wold
- the idea that managers and workers must sit down together to determine what to do
- the German name for co-determination
Are unions strong in Germany?
- yes, they are very strong
- these help keep the system going
- around 45% of labor force is unionized
How does the labor situation affect Germany’s competitiveness?
- positive: german workers are loyal, motivated, hard working, and have few strikes
- negative: system is too expensive and customers are increasingly unwilling to pay for it. need for consensus also makes the system inflexible and slow to change
Why have German banks been more powerful than the German stock market?
- German government support: each state has a government owned bank
- German savers prefer banks: people have high savings rate and put $ into secure bank rather than risky market
- German businesses prefer bank financing: like the privicy and convenience and long run focus
What was the Bundesbank's main policy goal, and why?
- Germany's powerful central bank
- lots of political independence
- practiced a tight monetary policy to prevent high inflation
- raised interest rates whenever inflation seemed a threat
Who controls monetary policy in Germany now?
now that Germany uses the euro, the ultimate monetary authority is the European Central Bank (ECB)