Economic analysis of Germany - Research Paper Example

A weaker country might have crumble amidst these economic and political pressures. But this is not the case. This paper will examine the reasons behind Germany’s outstanding economic performance despite the odds. Particularly, the claim that its highly skilled labor force is a main driver of the countrys spectacular growth will be explored. In addition to this, this paper will also explore the claim that its record as an innovator contributes to the strength of its economy. The body of literature recognizes the age of industrialization as the foundation of the character of the German economy.

Prior to the 1850s, Germany was years behind Britain and France in terms of industrial development. But the Germans were quick to catch up. After 50 years, in 1900s, the country reached the status of Britain and the United States as global industrial leader. The poor German economic performance before the 1850s is attributed to the institutional restrictions. The social and bureaucratic structures became the impediment to the recognized drivers of economic growth such as entrepreneurship. During this period, German economic policy networks are dominated by landed elites, the church and traditionalist government regimes.

The numerous rules and limitations imposed by these dominant economic forces stifled the development of important economic sectors. The economic breakthrough that finally enabled Germany to catch up to Britain was globalization. German industries were kept afloat its textile mills, which flourished after the tariff barriers were removed sometime in 1830s. This is further supported by the development of the railroad, which finally enabled German industries to diversify as more markets became accessible.

This development ushered in an era of engineers, architects, and machinists; of a skilled labor force, which emerge with the increase