The Political Economy Research Group (PERG) presents
No way to escape imbalances in the Eurozone?
Three sources for Germany’s export dependency: industrial relations, social insurance and fiscal federalism
Over the last two decades the German political economy has increasingly relied on export specialization as a strategy for economic recovery. This export-led development strategy turned out to be a mixed blessing. While on the one hand, specialization in high-quality manufactured goods has preserved Germany’s competitive edge vis-à-vis many other industrialized countries, it has on the other hand led to an increasing dependency on exports as the engine for growth. There has been no equally strong evolution of a domestic service economy beyond manufacturing-related services. The issue of export dependency becomes increasingly important with the financial crisis and global imbalances vis-à-vis Greece and the Eurozone but also globally. Weak aggregate demand depresses both domestic employment and endangers the still fragile construction of the Eurozone.
Prof. Anke Hassel argues that Germany finds itself in an export-dependency trap due to imbalances between domestic services and export-driven manufacturing. In her talk she will discuss three sources for the over-reliance on export-oriented manufacturing and weak employment in domestic services: firstly the industrial relations system, secondly social insurance financing of the welfare state and thirdly fiscal federalism. All three, Prof. Hassel argues, are fundamental pillars of the German political economy and locked into political coalitions that are not easily changed.
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Anke Hassel is professor of Public Policy at the Hertie School of Governance. She studied political science, economics and law in Bonn and at the London School of Economics and Political Science (LSE). In 1996, she joined the Max Planck Institute for the Study of Societies in Cologne, obtained her PhD in 1998 and completed her postdoctoral lecture qualification in 2003. She was a visiting scholar at the Social Science Research Center Berlin and King's College, Cambridge, UK. In 2003/2004, she worked for the Planning Department of the Federal Ministry of Economics and Labour (BMWA) and then joined the Jacobs University Bremen as Professor of Sociology. She is also an adjunct professor of the Graduate School of Social Sciences at Bremen University.