Publication

This paper discusses the extremely low growth performance of Germany since 1995 and examines long-run reasons for this loss of economic dynamics besides unification. The author finds that a declining share of investment in GDP, less innovative activity, an ineffective system for human capital formation, and an erosion of the export position with a reduced attractiveness for foreign direct investment have led to weak growth in Germany. He therefore raises the issue whether Germany belongs to a new category of economies, the newly declining countries.