Why should the government step up education first?

Strengthen the economy, invest in the future

“In Germany, many companies and freelancers generate prosperity from which we all live. That's nice. Life would become even more worth living if the social and economic freedom is greater than it is now. "from an online response dated April 21, 2015

Enable inclusive and environmentally friendly growth

There is agreement in science and statistics: That real gross domestic product (GDP) is suitable not as the sole indicator of wealth of society. Because prosperity is more than economic growth. And GDP does not say anything about how many people will benefit from growth and to what extent, how inclusive, sustainable and environmentally friendly it is.

"Growth must not be demonized, but we need sustainable growth."from the citizens' dialogue of the BMWi in Magdeburg on July 7, 2015

The gross domestic product is nevertheless a central and necessary indicator for the Economic performance of a country map. For better comparability between rural and urban regions and poor and populous countries it is per person specified.

The development of the gross domestic product per capita confirms: Germany is a strong country. Between 1991 and 2018 GDP per capita rose by more than 40 percent at.

In the East German countries the sum of the goods and services produced annually, which is included in GDP, has even more than doubled since reunification. In 2017, the GDP per inhabitant in the eastern German states reached a level of around 75 percent of that of the western German states. The differences between East and West Germany have decreased by more than 5 percentage points in the last ten years.

Development of the gross domestic product per capita in euros (price-adjusted, index 2010 = 100)

in the international comparison Germany has a relatively high GDP per capita. In 2019, Germany was ranked 18th out of around 192 countries. From the consequences of global economic and financial crisis in 2008 the German economy recovered quickly. Two stimulus packages from the federal government, the short-time work regulation and the stabilization of the banks, have contributed to this. In 2011, GDP per capita had already reached pre-crisis levels.

What is the federal government doing?

The Federal Government is helping to strengthen economic development with a large number of measures and instruments. In order to get the most up-to-date picture of the economic situation as possible, it forecasts the overall economic development for Germany three times a year. Building on this, the federal government estimates the tax revenue and draws up the federal budget.

Invest in a bright future

The future viability of an economy is determined by investments. In order to be wealthy not only today, but also tomorrow, investments are essential - public and private, in school buildings, roads and bridges, power grids, modern factories or high-performance information technology.

"You have to work for prosperity, so investing first and then redistributing it should always apply, otherwise our country, which is rich today, will be poor tomorrow."from an online answer dated June 12, 2015

The Investment rate indicates what percentage of economic output flows into private and public investments. The investment quota is measured using gross fixed capital formation as a percentage of GDP. The indicator is particularly important with a view to the future quality of life.

Development of gross fixed capital formation as a percentage of GDP

The Investment rate had stabilized in Germany since 2002 at a level of around 20 percent. Most recently, it rose to 20.8 percent and in 2018 was at its highest level since the early 2000s, but remains below the level at the beginning of the 1990s. At that time, a lot was invested as a result of German reunification.

in the Comparison with countries of the European Union With a total investment rate of 20.8 percent, Germany was just above the EU average of 20.6 percent in 2018.

Development of gross fixed capital formation as a percentage of GDP by state and private sector

Just under 89 percent of these investments are made by private individuals and around 11 percent by the state. The Companies mainly invest in new production facilities and create at the same time new jobs. The Country sustains and creates Mobility networks, infrastructures for services of general interest and common goods.

Some economists warn that Germany is lagging behind its potential, especially when it comes to public investments, when compared internationally. A international comparison state investment quotas is problematic, however. The state investment quota could be higher in other countries because the state takes on more tasks that are privately organized in Germany.

What is the federal government doing?

With almost 40 billion euros per year, the federal government is investing at a record level over the next few years - in high-performance infrastructure, affordable housing, better education and innovative research. The federal government relieves the municipalities with urban development funding and various programs in connection with displacement, immigration and integration. Through the municipal investment promotion fund, the federal government supports financially weak municipalities with financial aid to promote investments.

Budget solidly, remain able to act

A high standard of living is only possible in the long term if it is based on solid finances. Intergenerational equity, future financing of the welfare state and a low debt burden in the state budget. That was important to the citizens. The money we spend today must be invested wisely and raised through solid income.

"A strong economy, secure finances and jobs as well as a secure pension are important to us."from an online answer dated July 15, 2015

As a yardstick for the fiscal sustainability is the Development of the debt ratio. It puts the state's debts in relation to economic output (GDP).

After the global financial market and European sovereign debt crisis Due to the significant increase in the debt ratio, it has been possible in recent years to significantly reduce the total debt burden of the federal, state and local governments in Germany. In 2018, at 60.9 percent, Germany only barely exceeded the upper limit for the debt level of 60 percent of economic output set in the EU's stability and growth package

Development of the debt ratio

What is the federal government doing?

In 2014, the federal government closed a budget without new debt for the first time in almost 50 years. The national budget as a whole, i.e. the federal, state, local and social security funds, controls this in 2019 sixth year in a row towards a budget surplus. In the first half of 2019, the surplus was 2.7 percent of GDP. The federal, state and local governments have received over 45 billion euros more than they have spent. The Federal Government continues to pursue a solid and future-oriented budget policy.

Promote innovation and ingenuity

“In Germany we have a lack of innovation culture. Also because there are fears of loss and great fears of failure. There is no right to fail. It's a different culture than in the USA, we don't get a second chance. "from the citizens' dialogue of the Economic Council of the CDU in Dresden on September 22, 2015
"We have a high standard of living because many people have good ideas and develop patents on the basis of which we have become export champions."from an online answer dated August 16, 2015

The assessment of the innovation culture in Germany could not be more different. What is the situation really like?

Economists agree: Investing in research and development increase the productivity and the competitiveness of economies and thus create growth. The participants in the Citizens' Dialogue were also aware of the importance of recognizing future issues and implementing innovative ideas. Particularly in the areas of health and the environment, people emphasized the great importance of research.

An important, established and internationally comparable Indicator for the ability to innovate of an economy are those Research and Development Expenditures (R&D) in Relation to economic output.

Between 1995 and 2017, R&D expenditure rose from 2.2 to a good 3 percent.2 In 2017, almost 100 billion euros were spent on research and development in Germany. That is around eight percent more than in the previous year and 23 percent more than ten years ago

The look at the EU member states shows how well Germany is doing in terms of total spending on R&D. In 2017, the Federal Republic of Germany was in fourth place in an EU comparison. However, in a global comparison, significantly more money is sometimes spent on R&D, for example in South Korea (4.22 percent) or Japan (3.28 percent).

Development of expenditure on research and development as a percentage of GDP

What is the federal government doing?

With the excellence strategy, the federal and state governments promote top-level university research. In order to further develop the future technologies of artificial intelligence (AI) and to make AI “made in Europe” a trademark, the federal government is making up to three billion euros available for the AI ​​strategy. The high-tech strategy 2025 will advance the further development and application of key technologies. In order for German companies to invest more and survive in international competition, the Federal Government is promoting research and development with taxation.

Improve start-up culture

Small and medium-sized companies provide 16 million jobs in Germany. They offer eight out of ten apprenticeships. Business start-ups ensure more competition. They bring about innovation, higher productivity and a larger product range.

"Entrepreneurs want to act more independently instead of being incapacitated."from the citizens' dialogue of the German Chamber of Commerce and Industry in Berlin on July 9, 2015

Many small, newly founded companies are particularly innovative. The fewer hurdles, the faster the path to self-employment. The EU's 2011 targets for business start-ups are a maximum duration three working days and Cost of around 100 euros.

Economists are demanding a due to the falling number of founders Enhancing the promotion of business start-ups and one Removal of bureaucratic hurdles for young companies.

The indicator can provide an indication of progress in this area Length of time to set up a company give. It counts the average number of days that the official steps take to establish a corporation in Germany.

Duration of business start-ups in days
Business start-up costs in euros

In 2018, it took an average of 7.6 days to set up a company in Germany and cost 383 euros. Germany is above the EU average of 3.1 days and costs of 300 euros for both indicators.

In addition, Germany does not offer founders a single point of contact, a so-called "one-stop-shop" that enables them to register their company within a day. This makes Germany the only member state that does not meet any of the three EU targets.

Even if it should be noted in international comparisons that Germany offers a high level of legal certainty for young entrepreneurs, a clear one is needed Improvement of the start-up culture. The federal government wants to motivate and support founders. The focus is on easier access to suitable financing options for new entrepreneurs.

What is the federal government doing?

With the third bureaucracy relief act, the federal government is relieving German companies by 1.17 billion euros annually. So that innovative and fast-growing technology companies have better access to capital, the start-up culture in Germany is being strengthened with KfW Capital and the start-up initiative.