The development model is at the end of the line and Germany doesn’t know how to reinvent itself

A study by the German Economic Institute (IW), based on OECD data, finds that in 2022 Germany made foreign direct investments of 125 billion euros, compared to only 10.5 billion of foreign direct investments in Germany. Among the causes are the American subsidies and the high cost of German energy, the leakage from the internal combustion engine and the shortage of skilled labor. The figure for a single year certainly cannot be assumed as the basis for a trend, but in Germany the debate is very lively, accompanied by the traditional German Angst, and the cries of alarm are multiplying due to the risk of deindustrialization. According to the latest forecasts from the IMF, Germany in 2023 will be the only G7 country to record a contraction in growth, equal to 0.1 per cent. Of the last five quarters, only two were positive. The fear is that Germany has reached the end of its development model and must reinvent itself, with a process that is not necessarily short and painful. Berlin has the problem of uncompetitive energy costs, over-dependence on the old school engineering tradition, poor political and commercial responsiveness to move towards higher growth sectors, a very static and fragmented financial system.