Innovate and grow
March 26, 2010
A slump in international trade during the global economic downturn meant that Germany, as the world's second largest exporter, was hit hard. A report from the Organization for Economic Co-operation and Development (OECD) says that in future Germany should develop more innovation in its domestic market.
The OECD performs a survey of 30 key world economies every 18 to 24 months. In the latest economic survey for Germany, the report is positive about Germany's growth but says there needs to be further domestic investment. The OECD expects the country's gross domestic product (GDP) to increase by 1.3 percent and 1.9 percent in 2010 and 2011 respectively.
'Innovation is key'
The report also says Germany has lost ground in innovation and it now needs to be encouraged in the services sector and export industries.
"Innovation is key to boost competitiveness and domestic demand," said OECD Secretary General Angel Gurria as she presented the report in Berlin on Friday.
The report suggests a number of detailed measures to achieve more innovation and growth. The measures are meant to ease red tape when creating businesses and introduce tax incentives to encourage companies to invest in innovation.
A statement from the OECD said innovation would be "a driver for growth and job creation."
Reforms also needed in education
In many OECD countries, 40 percent of school leavers go on to higher education, but in Germany the level is stagnating at just above 20 percent. Despite a strong vocational training system, the report says more young people need to go on to university.
"Germany needs more highly educated workers with a broader set of skills to achieve higher productivity, higher income and longer employment," Mr Gurria said.
Thanks to flexible working and short-time work schemes, Germany's labor market was shielded from the worst of the economic downturn, but the report said these schemes should now be phased out.
"Countries with a large difference in regulation between regular and temporary work contracts are at risk of developing a dual labor market, as has occurred in Spain and Japan," the report warned.
cb/dpa/AFP/Reuters
Editor: Ben Knight