Endogenous Factors of Deindustrialization of the German Economy

Germany is facing the challenge of deindustrialization characterized by the closure of industrial factories, job cuts in the manufacturing sector, and the relocation of production abroad. This article examines the endogenous factors driving the deindustrialization of the German economy. The labor costs in Germany are estimated in comparison with competitors from the EU and Asian countries. The article also analyzes a chronic lag in labor productivity growth relative to the increase in unit labor costs in Germany. The presence of infrastructure deficits (railways, motorways), a high degree of bureaucratization, and a shortage of qualified personnel, which is especially noticeable in the metalworking industry, mechanical engineering, and electrical engineering, are also identified as causes of the crisis in German industry. The article concludes that the significant decline in the attractiveness of Germany as an economic and political landscape is caused by the entire combination of the endogenous factors examined.