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Economy and business in Germany

Business and Economy of Economy and business in GermanyAccording to countryaah, Germany's gross domestic product - GDP amounted to approx. EUR 3133 billion in 2016, placing the country in fourth place in the world (after the US, China and Japan). Germany was the world's export nation in the 2000s. In 2009, China took first place from Germany. The most important export goods are cars, machines and products from the electrical and chemical industry. In 2011, the working population was distributed as follows: agriculture and forestry, fishing: 2 per cent; industry: 24 percent; service industry: 74 percent.

The political division of the country between 1945 and 1990 has left deep traces. The business world was built up by two vastly different systems: planning economics in East Germany, market economics in the west. After the merger of the two German states, the introduction of market economy in the eastern regions occurred at a rapid pace.

Business and Economy of Germany

The restructuring problems were large and resulted in, among other things, very high unemployment. The financial differences were enormous; both salary level and standard of living were much lower in former East Germany than in West Germany. Large parts of the production apparatus in the east were run down and required huge new investments. Through the state-owned company Treuhandanstalt, the state-owned enterprises of the former GDR were privatized. In the years 1990-1994, approx. 3500 of these wound up as unprofitable, while the others approx. 4,500 were divided into smaller units, over 50,000 in total. Most of the new owners were from West Germany, but many companies have come in foreign hands, such as the Norwegian Aker Yards, which took over the shipyards in Wismar and Warnemünde.

The closure of state-owned enterprises resulted in the loss of 350,000 jobs, but many more disappeared as a result of the modernization of the restructured companies. The state had to take over a loss after the GDR companies of about DM 270 billion, which at the beginning of the 1990s corresponded to almost NOK 1200 billion.

One of Germany's economic problems has been the high unemployment rate, which in the 1990s was over 10 per cent. Unemployment has been unevenly distributed, highest in the eastern states (up to 17 percent), and lowest in the two southern states (6 percent). In 2012, unemployment in Germany had fallen to around 7–8 per cent.

The high unemployment caused a lot of bitterness in the East German population, because in their opinion the process of forming one state in practice was more like incorporating the former GDR into the West German society than a merger of the two equal countries.

The basis for the different developments for the two German states was laid in the settlement after the Second World War. After the devastation of the war, the West German economy was quickly rebuilt, including large labor reserves, financial aid, Marshall aid and skilled organization. Growth occurred in the 1950s-1960s at such speed and magnitude that the epoch has subsequently been termed "Das Deutsche Wirtschaftswunder" - "the German economic miracle".

East Germany, on the other hand, was separated from the areas in the west, to which it had been economically linked. The country lacked many important raw materials and had an unfavorable industrial structure. Prohibition of production, dismantling of factory facilities, damages to the Soviet Union and restructuring difficulties in socializing society greatly hampered economic development until the latter part of the 1950s. The large emigration to West Germany also tapped East Germany for valuable labor.

Agriculture

German agriculture covers approx. 90 percent of the country's consumption. Nearly 70 per cent of agricultural land is arable land, approx. 1 percent is used for fruit and wine cultivation, and the rest is meadow and pasture. Agriculture's share of employment has declined sharply throughout the period after 1950. The same applies to agriculture's share of gross domestic product (GDP). In 1989, primary industries accounted for 1.7 per cent of GDP in West Germany and employed 3.8 per cent of the total labor force. In the same year, primary industries accounted for 10 per cent of GDP in East Germany and employed 11 per cent of the labor force. In 2011, the figures for the whole of Germany were 1 and 2 percent respectively.

The structure of farm operations was very different in the two parts of Germany. In the western part, agriculture was and is privately run. In recent years, relocation and mergers have reduced the number of minor uses. Farms with less than 200 acres of land in 1993 accounted for over 60 percent of all uses; Ten years later, this figure has been reduced to 57.5 per cent of the total 420,000 farms throughout Germany. At the same time, there have been an increasing number of the largest uses, of 1000 acres or more. Almost half of the total agricultural land belongs to such uses. The average size of farms is just over 400 acres, but there are big differences - the largest farms we find in the northeast, the smallest in the south. Animal husbandry in small units is becoming less prevalent; specialized companies, so-called agrarian factories, are taking over more and more.

In East Germany, 30 per cent of agricultural land was distributed to small farmers and farmers in 1945, and the number of small farms increased sharply. In the period after 1952, more and more land was collected in large collective farms (Landwirtschaftliche Produktionsgenossenschaften, LPG) and state farms (Volkseigene Güter, VEG). In 1989, about 95 percent of agricultural land was socialized and distributed among 3855 collective farms and 465 state farms. After 1990, agriculture in the former East Germany was re-privatized. 22,500 private farmers decided to run farms at their own expense. Meanwhile, the 3 / 4 of the original LPG farms converted to different forms of capital companies. Animal husbandry is greatest in the states of Bavaria, Lower Saxony, Saxony and Thuringia.

The best agricultural land can be found in the marshlands along the North Sea, the loose areas north of the Mittelgebirge and the valley regions in southern Germany. The areas just south of Magdeburg are perhaps the most fertile area in all of Germany.

Agriculture is the most important. The most important crops are sugar beets, grains (especially wheat and barley), potatoes, corn and rapeseed. The most common vegetable and fruit varieties are as in Norway.

Germany is among the world's largest producers of hops, used for beer brewing. In Germany, wine has been grown since Roman times. Today, the country ranks 7th among the world's wine-producing countries with an annual production varying between 9 and 10 million hectoliters. The main districts situated on the Rhine and Moselle tributaries, and in the state of Rhineland-Palatinate produced 2/3 of all German wine. As in the other European wine countries, production volumes have declined, while at the same time aiming for higher qualities. Traditionally, white wine has dominated strongly, but that is no longer the case. In 1999, red wine accounted for 25 per cent of total production, in 2005 this proportion had risen to 41 per cent.

Fishing

Fishing has declined sharply year by year. In 1957, the catch volume was 790,000 tonnes, in 2002 only 205,000 tonnes. Most of the fishing takes place today in the North Sea (especially herring and saithe) and in the Baltic Sea (sprat, herring and cod). Mackerel fishing is greatly reduced. All fishing is internationally regulated, and Germany's quotas for 2006 total 80,000 tonnes in the North Sea and 64,000 tonnes in the Baltic Sea. Herring accounts for 52 percent of this. The largest fishing ports are Bremerhaven, Cuxhaven, Hamburg, Kiel and Rostock.

Forestry

The total forest area is 107 000 km2, and forestry is an important industry. The annual harvest is approx. 35 million m 3. About. 3 / 4 of forestry is state-run. The productive forest area was considerably reduced until the end of the 1900s, but has subsequently increased somewhat again. In former East Germany, the forest area was more than halved in the period 1950–1965. Large forest areas were also affected by pollution, see other forest deaths. Better forest management has led to improvements. For ecological reasons, a great deal is invested in the planting of deciduous trees.

The largest forest areas are located in the south, in Bavaria and Baden-Württemberg, which together account for over half of the forest harvest. The majority of German forestry is operated in large units; most of the timber goes to the pulp, cellulose and paper industries. Over 70 per cent are pine forests (spruce, pine).

Energy

Germany has large coal deposits, but most of its energy consumption is based on imports. In 2016, the consumption of primary energy in Germany was 13 EJ (exa joule), with an import share of 66 per cent. Per capita consumption was 158 GJ.

Oil and natural gas resources are small, and Germany has to import virtually all oil used. In 2017, 91 million tonnes of oil and 83 billion cubic meters of natural gas were imported. 16 per cent of gas consumption is covered by own production in Emsland and the North Sea, the rest comes from Russia (32 per cent), Norway (26 per cent), the Netherlands (23 per cent) and Denmark (3 per cent). Most are transported through pipelines from production or unloading ports, such as gas from the Norwegian North Sea fields to Emden or crude oil from Italian port cities to refineries in Ingolstadt north of Munich.

In 2018, primary energy consumption was distributed as follows: oil 34.1 per cent, coal 10.1 per cent, lignite 11.5 per cent, natural gas 23.5 per cent, nuclear energy 6.4 per cent and renewable energy 14.0 per cent. Natural gas and wind power have become increasingly important, while lignite as a power source has lost some of its former dominant position. The development of nuclear power plants in Germany has been halted, and it has been decided that all nuclear power plants will be closed down by the end of 2022.

In 2017, the production of electrical energy was 651 TWh. 53.3 per cent of the production was based on fossil energy, mainly by coal (37.7 per cent) and natural gas (13.6 per cent). Nuclear power accounted for 11.6 per cent, while renewable energy accounted for 35.3 per cent by wind (17.1 per cent), solar energy (6.4 per cent), renewable heat (7.7 per cent) and hydropower (4.1 per cent).. Final consumption per capita was 6,500 kWh.

Industry

Germany is the world's fourth largest industrial country, after the United States, China and Japan. After the reunification in 1989, the market economy was introduced in the former GDR, and the industry was completely restructured. The former state-owned enterprises were privatized, and foreign trade with the former communist states in Eastern Europe was greatly reduced. The expansion of the EU eastwards has created both challenges and opportunities for industry in Germany.

In 2004, the industry employed 30.8 per cent of the workforce (including construction) and contributed 29 per cent of the gross domestic product.

Coal deposits in the country are an important localization factor. This applies, for example, to the Ruhr area, which is the country's largest industrial concentration. Of traditional industry there is a considerable iron and steel, metal goods, machinery, chemical and petrochemical industries, textile industry and more. Much of the traditional industry has declined (market failure, foreign competition), but new branches have emerged - electronics, computers, precision instruments and communication equipment. Bochum has become a center for space research. Düsseldorf is the Ruhr area's financial and administrative center. Saarland in the border areas against France, is also an old industrial area, developed with coal as an energy source. Besides a varied heavy industry, the area is known for its manufacture of glass and ceramic products.

Southern Germany, which used to be mainly agricultural land, has gradually attracted more and more of the computer industry. Thus, the center of gravity of the so-called "intelligence industry" has been drawn south in Germany. The main industrial products in southern Germany are electrotechnical equipment, optical articles, motor vehicles and machinery and consumables of all kinds. Munich, Stuttgart and Nuremberg are the most important cities with a versatile industry, Ludwigshafen and Mannheim on either side of the Rhineforms one of the country's largest inland ports, while Frankfurt is a major financial city with head offices for a number of banks and insurance companies, as well as the country's center for publishing and bookstore.

In the northern areas of Germany are the major port cities of Hamburg, Bremen, Kiel and Rostock, all with considerable engineering industry, especially in shipbuilding. During the 1970s, these experienced a significant decline in shipbuilding. However, building a new growth industry has provided new jobs in a region that is still struggling with high unemployment. Rostock - like other cities in the former GDR - lost large parts of the shipbuilding industry after 1990, but something has been preserved and has escaped the painful privatization process. Hamburg is the country's most important port city, with major petroleum refineries, chemical factories and metallurgical industry. Furthermore, extensive electronic and fine mechanical industry has been developed. Bremen has a metallurgical industry, shipyards, textile and food industry. Hanover, with major chemical and electrical companies,Deutsche Industrimesse. Wolfsburg further east is known for its Volkswagen factory, the tourist town of Lübeck, among other things for its marzipan products.

In East Germany, the electronics industry is mainly located in Berlin, Dresden and Chemnitz, optical industry (Zeiss) in Jena. Iron and steel mills, based mainly on imported raw materials, have been erected, among others, in Eisenhüttenstadt southwest of Frankfurt an der Oder. There are several shipyards in Rostock. The textile industry is old-fashioned in Saxony, including Plauen, Chemnitz and Zwickau. Leipzig is from the old of a significant publishing center.

Mining

Germany has relatively limited mineral resources, with the exception of coal, which in turn has played a major role as energy raw material (and partly as raw material for the chemical industry) for the country's industrial growth.

Germany is the world's largest producer of lignite, but production is somewhat declining. In 1995, 193 million tonnes were produced, in 2003 179 million tonnes, and lignite is no longer the most important source of energy. The largest lignite beds are located west of Cologne, in Lausitz southwest of Berlin, and in a large area around Halle. Production is greatest in the Cologne area, but is more dominant in the poor German East Germany, where the GDR authorities stimulated large production and research on coal chemistry and technology. The most important quarries are found in the Ruhr area and Saarland. The production of potassium (potassium carbonate) at Magdeburg is also considerable. Zinc, lead, copper, iron ore and quartz are also extracted.

Tourism

Germany was visited by 35 million foreign tourists in 2016. Arrivals from abroad have grown sharply in recent years. In 2011, Germany was visited by 28 million foreign tourists. Domestic tourist traffic accounted for 136 million tourists. Inland arrivals have increased from 120 million in 2011.

Bavaria is the No. 1 tourist country, and Baden-Württemberg No. 2. In the eastern states, Mecklenburg-West Pomerania and Berlin, in particular, have seen a significant increase in the tourism industry. The ski resorts in southern Germany attract a great number of tourists. Otherwise, well-known attractions such as the Rhine Valley with its castles and wine villages, the many romantic half-timbered villages around the country, the forest and mountain areas of the Black Forest, the Harz and the Alps are visited.as well as the scenic landscape of Mecklenburg. Beaches along the Baltic Sea coast and on the Frisian islands along the North Sea coast are also popular tourist destinations. In addition, big cities such as Berlin, Hamburg and Munich attract many tourists annually with their rich cultural and activity offerings, and cities such as Dresden, Leipzig and Weimar with their rich cultural and historical background. Also widely visited are international trade fairs in Düsseldorf, Frankfurt, Hannover, Cologne and Munich.

Most tourists come from the Netherlands, the United States and the United Kingdom. The tourism industry provides direct or indirect work to almost 3 million people and contributes 8 per cent of Germany's gross domestic product.

Business sector by state

The three most producing states account for 54.7 percent of the total gross domestic product - GDP in Germany. Furthermore, the center of gravity of Germany's business is evident in former West Germany, but also geographically in southern Germany.

Number (rank) State (Bundesland) Percentage of GDP GDP in billions of euros
(Total) (Germany) (100%) 3133
1 North Rhine-Westphalia 21.4% 670
2 Bayern 18.1% 568
3 Baden-Wurttemberg 15.2% 477
4 Hesse 8.6% 270
5 Lower Saxony 8.4% 264
6 Rhineland-Palatinate 4.5% 139
7 Berlin 4.1% 129
8 Saxony 3.8% 118
9 Hamburg 3.5% 111
10 Schleswig-Holstein 2.8% 89
11 Brandenburg 2.1% 69
12 Thuringia 1.9% 61
13 Saxony-Anhalt 1.9% 59
14 Mecklenburg-Vorpommern 1.3% 41
15 Saarland 1.1% 35
16 Bremen 1.0% 32

Foreign Trade

Germany has a considerable foreign trade and has a surplus in the balance of trade abroad. During the 2000s, profits have steadily increased. In 2016, the export value was EUR 1204 billion. (In 2005, the export value was EUR 786 billion). The main export goods are machinery and motor vehicles, chemical products, semi-finished metals, electrical equipment, electronic articles, measuring instruments and optical equipment.

In 2016, the import value was € 960 billion, spread over a wide range of goods. (In 2005, the import value was EUR 629 billion.) The main import goods are chemical products, motor vehicles, oil and gas, machinery, electronic articles, metallic semi-finished products, office machines and foodstuffs. Germany is a member of the EU and has a great deal of trade with the other member states, especially France, the UK, Italy, the Netherlands and Belgium. In addition, the US and China are important trading partners.

Exports by country (2016)

During the 2000s, China has become an important trading partner of Germany. France was previously Germany's largest export market. This place has now taken over the United States.

Rank Country percentage in billions of euros
1 United States 8.9% 107
2 France 8.4% 101
3 Great Britain 7.1% 86
4 Netherlands 6.5% 78
5 China 6.3% 76
6 Italy 5.1% 61
7 Austria 5.0% 60
8 Poland 4.6% 55
9 Switzerland 4.2% 50
10 Belgium 3.5% 42
29 Norway 0.7% 9

Imports by country (2016)

Rank Country Percentage in billions of euros
1 China 9.8% 94
2 Netherlands 8.6% 83
3 France 6.8% 66
4 United States 6.0% 58
5 Italy 5.4% 52
6 Poland 4.8% 46
7 Switzerland 4.6% 44
8 Czech Republic 4.4% 42
9 Austria 4.1% 39
10 Belgium 4.0% 38
19 Norway 1.4% 13

Exports by main product groups 2015

Rank Category Percentage of total in billions of euros
1 Vehicles and parts 19.0% 227
2 Machines 14.2% 170
3 Chemical products 9.0% 108
4 Data processing equipment, electrical and optical products 8.2% 98
5 Electrical appliances 6.0% 72
6 Pharmaceutical and similar products 5.9% 70
7 Other vehicles 4.9% 58
8 metals 4.2% 50
9 Foods and foods 4.1% 49
10 Rubber and plastic products 3.5% 42

Imports by main product groups 2015

Rank Category Percentage of total in billions of euros
1 Data processing equipment, electrical and optical products 10.9% 103
2 Vehicles and parts 10.3% 98
3 Chemical products 8.1% 77
4 Machines 7.8% 74
5 Petroleum (Oil and natural gas) 6.4% 61
6 metals 5.6% 53
7 Pharmaceutical and similar products 4.8% 46
8 Foods and foods 4.5% 43
9 Other vehicles 4.1% 39
10 Clothing (Clothing) 3.3% 31

Transport and Communications

Due to its central location in Europe, Germany is an important transit country between the north, south, east and west. After the Second World War and until the Iron Curtain fell, the East-West connection was severely limited. The 1381 km long border between East and West Germany was strictly monitored, with only four road crossings and four railway lines crossing the border. Everyone else was blocked, partially torn up. Major war damage, disassembly and weak economy had made it difficult to expand the transport system in East Germany. Therefore, both the road and rail networks were quite worn out at the reunion, and repairs, modernization and further development have been extensive since.

The road network

The road network is well developed, because the difference between the west and the east has been reduced. In total, the road network amounts to 230,000 km (2017), mostly paved. The motorway network measures 13,000 km (2017) and is among Europe's best. In 2004, approx. 54 million motor vehicles, including 45 million private cars. Traffic diversion in the press areas is often a problem, despite the well-developed road network.

Railways

The railway network is also well developed and is approx. 39,000 km (2015) in total, of which 33,000 are electrified. About. 3000 km is privately owned, the rest is operated by Deutsche Bahn AG, which was established in 1994 by the merger of the West German and the East German Railway Company. Hamburg and Hanover are important hubs in the north, Frankfurt and Stuttgard in the southwest. The main lines go in the north-south direction, but the east-west links between the Rhine valley and the Ruhr area in the west and Berlin and Saxony in the east have again become very important stretches. There are good connections with all neighboring countries, with Scandinavia also via rail ferries from Sassnitz to Trelleborg in Sweden and Puttgarden to Rødby in Denmark. Train traffic distinguishes between IR, IC and ICE trains (InterRegio, Intercity and Incercity-Express). IR is a long distance network that covers a wide branch network,

Aviation

In civil aviation, 201 million passengers were flown in 2016. This is an increase from 121 million passengers in 2003. During the same period, international traffic has increased from 100 million to 177 million passengers. In 2016, Germany had over 2.1 million flights (aircraft movements). Frankfurt am Main International Airport is the largest with 61 million passengers and 457,000 flights (2016). Then followed by Munich with 42 million passengers, Düsseldorf with 24 million passengers and Berlin-Tegel with 21 million passengers (2016). Furthermore, Berlin-Schönefeld has 12 million passengers. Other major airports in Germany are Hamburg, Cologne/Bonn and Stuttgart.

Airline Lufthansa is Europe's largest and the world's fourth largest airline with 117 million passengers (2016). There is a sharp increase from 45 million passengers in 2004. Lufthansa has a fleet of 650 aircraft and flies to 321 destinations.

Berlin-Schönefeld is being expanded into an international major airport under the name Flughafen Berlin Brandenburg "Willy Brandt". The airport is scheduled to open in 2020 (previously scheduled opening was 2014).

Shipping

Germany has a dense network of inland waterways, totaling approx. 7500 km. In 2004, the inland fleet consisted of 580 passenger ships and 2350 cargo vessels, which carried approx. 15 per cent of total freight transport. The main waterway is the Rhine, and the largest inland port is Duisburg in Ruhr. Other important river ports are Berlin, Dortmund, Frankfurt an der Oder, Magdeburg, Mannheim and Ludwigshafen. Transportation includes ore, petroleum, coal, iron and steel. In 1992, the Main-Danube Canal was opened. It provides connections between the North Sea and the Black Sea.

In 2004, Germany's merchant fleet comprised 508 ships with a total gross tonnage of over 50 million gross tonnes; the bulk is dry cargo ships. Main port cities for seagoing vessels are Bremen, Hamburg, Rostock and Wilhelmshaven; Wilhelmshaven is an important oil port. However, Rotterdam (the Netherlands) is the largest import port for freight.

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