Germanys Economic Policies Essay

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Germany has established itself as a successful country with a growing and stable economy. In terms of its economic policies, since 2014 its score has fallen by .2 placing it into rank 5 within the international top ranks. Of its many efforts to stabilize the country, the most notable is increased regulation, meaning pension-system expansions and a minimum wage (). Along with economic policies favoring regulation, Germany has remained strong in terms of employment growth and export performance, allowing for low unemployment rates and rising wages. While Germany has improved and stabilized, the rising influx of refugees has put a damper on the country's ability to create new policies for the labor-market.

Regardless, there are many positives in Germany's economic policies that has boosted tax revenue. The boost also comes in terms of reduction of debt-to-GDP ratio even with rising debt. Germany has done an amazing job of successfully addressing many serious financial hurdles and weaknesses brought on by the post-unification period. They did so by introducing a robust economic structure characterized by a good mixture of industrial and service sectors and a wave of reforms that improved several key areas. These key areas are the pension system, unemployment benefits, and corporate taxation among others ().

In terms of monetary policy, Germany's budgetary situation remains positive thanks to its decrease of debt-to-GDP ratio from 74.6% (2014) to 70.7% (2015) (). It also lends to Germany having the highest possible credit rating creating higher levels of debt that the country manages with a surplus thanks to the monetary policies in place favoring public regulation instead of private self-regulation. This is because in the past, Germany had to provide expensive and costly bailouts to private banks, leading to short-term economic instability.

Germany's decision to align with the Euro and the European Union has also proved favorable, creating further stability even with the addition of Brexit and other problems in the EU (Bachtler and Turok, 2013). Thanks to such impressive gains, German assumed a main part in the fight against Europe's sovereign debt crisis. To this end Germany has become an advocate of what can be seen as a European banking union that would include policy changes for bank restricting during a time of crisis. The country also wishes to defend its domestic banking system especially concerning special deposit insurance programs of banks like Sparkassen which are state-owned (Kammlott, 2013).

The fiscal policies of Germany lost steam in recent years. The main cause could be political as well as macroeconomic. For example, sovereign debt crises and structural hurdles in other European nations made Germany an ideal business location. This meant there was no need for the government to change the existing tax system. Additionally, buoyant tax revenues meant raising tax revenues was unnecessary. Germany has seen a 20% rise in tax revenue from 2010 to 2014 (UNESCO, 2014). Such a rise enabled the government to effectively balance the budget and have surpluses in Germany's social security system. Complacency took place of uncertainty as there was no need to change a system that has seen success.

Some changes have been made in terms of Germany's structural policy. For example, Germany has succeeded in lessening structural unemployment since mid-2000's (Reiff, 2015). This means 43 million people were employed in 2015 in Germany. Although Germany has decided against privatization and more towards regulation and.....

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Bachtler, J. and Turok, I. (2013). The coherence of EU regional policy. London: J. Kingsley Publishers.

Bulmer, S. (2015). The Domestic Structure of European Community Policy-Making in West Germany (Routledge Revivals). Abingdon, Oxon: Routledge, Taylor & Francis Group.

Kammlott, C. (2013). Das Kapitalbeteiligungsgeschaoft der Sparkassen-Finanzgruppe. Wiesbaden: Deutscher Universitaotsverlag.

Reiff, M. (2015). On Unemployment: A Micro-Theory of Economic Justice. International Monetary Fund. European Dept.

SGI, (2016). SGI 2016 - Germany - Economic Policies. [online] Available at: [Accessed 25 Oct. 2016].

Trading Economics, (2016). Germany GDP - 1970-2016 - Data - Chart - Calendar - Forecast - News. [online] Available at: [Accessed 25 Oct. 2016].

UNESCO, (2014). EFA Global Monitoring Report -- 2013 -- 2014 -- Teaching and Learning Achieving quality for all. UNESCO.

WorldBank, (2016). GDP per capita growth (annual %) - Data. [online] Available at: [Accessed 25 Oct. 2016].

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