This is the press release from the German think-tank Ifo Institute:
The ifo Institute takes a critical view of the German government's new industrial strategy. "This industrial strategy harbors dangers and neglects the special conditions of Germany as a business location," says ifo President Clemens Fuest. "The orientation towards China's industrial policy is misleading because China is still a country that is catching up technically in many sectors. An investment steering industrial policy with a strong export orientation can accelerate this development." The ifo researcher Oliver Falck says: "German industry, on the other hand, is moving at the global technology frontier. Research on industrial policy strategies shows that in such a situation fierce competition and pressure to change are far more important for success, especially for large companies.“
It is positive that the German government is committed to maintaining the competitiveness of Germany as an industrial location, for example through the tax system, Fuest continues. It is also right to take into account the consequences of technological change and the industrial policies of other countries, especially China. "But protecting large German companies from takeovers and facilitating large-scale mergers would reduce competitive pressure and the pressure to innovate and change in these companies."
The emphasis that the size of companies is important for their competitiveness is problematic. "The global success of the German economy is based precisely on the success of the 'hidden champions', who achieve competitive advantages not through size but through flexibility and a high degree of specialisation," says Fuest. The steering of investments to specific projects where market failures are not apparent, such as mass production of battery cells in Germany, entails the danger of resource misdirection and distortions of competition to the detriment of other companies in Germany. Moreover, "the discussion about such subsidies will only lead to private investors waiting," says Fuest.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.