What are the institutional foundations of Germany's export-oriented growth regime?

Our Assistant Professor in Political Economy Dr Donato Di Carlo has contributed a chapter co-authored with Anke Hassel to a new book: Growth Strategies and Welfare Reforms: How Nations Cope with Economic Transitions (Oxford University Press).

In line with the book’s overall approach, in their chapter titled “Germany: Adjustments of an Export-Led Growth Regime,” the authors analyse the institutional foundations of Germany’s export-oriented growth regime and investigates the role of government policy in the pursuit of an export-oriented growth strategy, particularly concerning the reform trajectory of Germany’s welfare state.

Abstract

The chapter traces the evolution of Germany’s export-led growth regime across three distinct phases, focusing on the interplay between the growth regime and governments’ economic and social policy reforms. In the first phase (1990–2007), post-reunification challenges led to wage restraint, fiscal consolidation, and labor market dualization to restore competitiveness and strengthen exports. The second phase (2007–2019) saw a partial rebalancing, with labor market reregulation and moderate public investment addressing structural weaknesses. In the third phase (2020 onward), crises like COVID-19 and the energy shock prompted a shift toward interventionist industrial policy and Keynesian fiscal measures. These phases underscore how economic policies have evolved to sustain Germany’s export-driven model amidst shifting pressures and priorities.