GERMANY

Federal Republic of Germany

Bundesrepublik Deutschland

COUNTRY OVERVIEW

LOCATION AND SIZE.

Located in western Central Europe, Germany has an area of 357,021 square kilometers (137,810 square miles), which makes it slightly smaller than the state of Montana. The country is bordered by the North Sea, Denmark, and the Baltic Sea to the north; Poland and the Czech Republic to the east; Austria and Switzerland to the south; and France, Luxembourg, Belgium and the Netherlands to the west. The capital city, Berlin, is located in the northeastern part of the country.

POPULATION.

The population of Germany was estimated at 82.8 million in 2000, adding up to a 4.3 percent increase from 1990. The birth rate was only 9.35 births per 1,000 population and the death rate was 10.49 per 1,000, causing a decrease in the natural born population during 2000. The growth of the population during the 1990s was mainly due to immigration . The immigration rate was 4.01 immigrants per 1,000 population in 2000. The population of Germany has increased 21 percent over the second half of the 20th century, but it is expected to contract to 79.3 million by 2025 and 70.3 million by 2050. The birth rate is declining due to a fertility rate of 1.38 births per woman in 2000, far below the replacement threshold of 2.1 births per woman. The population, as in most of Europe, is also aging with a high life expectancy of 77.44 years for the total population (74.3 for men and 80.75 for women in 2000). In 2000, 16 percent of the population was 14 years old or younger, while an equal percentage was 65 years or older.

Germany's welfare system has supported population growth by offering social services, such as old-age pensions, health and unemployment insurance, disability benefits, subsidized housing, and subsidies to families raising children. However, these programs have so far failed to increase Germany's birth rate. Higher living standards and the modern economy restricted population growth during the 1990s. Germany's labor force is expected to shrink, particularly after 2020, and the number of pensioners will grow steadily. This decline in the ratio of active workers to retirees may force Germany by 2020 to bring in as many as 1.2 million immigrant workers annually (both skilled, such as computer programmers, and unskilled) to maintain its industrial output at 2000 levels. To offset these effects, the German government

has encouraged policies that sustain the life of native workers such as better health care, nutrition, and adult education. Public social security system reform is also important as the number of taxpayers decreases, causing intense financial pressures on those who still work. Structural unemployment has prompted the government to offer early retirement options to those who have skills and want to work yet cannot find work in their chosen fields. This has increased the pressure on the German retirement system and welfare system as a whole.

Higher living standards in Germany continuously attract many economic immigrants, mostly from eastern and southern Europe and the Middle East. The country received a considerable number of refugees from the Yugoslav wars in the early 1990s. In 2000 ethnic Germans formed 91.5 percent of the population and the most significant minority group was the ethnic Turks (2.4 percent), while Yugoslavs, Italians, Russians, Greeks, Poles, and Spaniards made up the rest. In 1998 there were about 7.3 million foreigners in the country. Some Germans blame immigrants for taking jobs from native-born people, equating unemployment with foreigners. Some occurrences of racism and ethnic hatred have been reported throughout the country but mostly in the poorer eastern states.

The population density was 233.8 people per square kilometer (605.5 per square mile) in 1995. In 1997 about 57.4 percent lived in towns and cities of 20,000 or more inhabitants. Approximately 87.3 percent of Germans lived in urban areas in 1999, mainly in the industrial region of the Ruhr in the western portion of the country. The main cities are Berlin, the capital, with a population of 3.46 million; the free port city of Hamburg on the River Elbe in the north, with 1.71 million; the Bavarian capital Munich in the south, with 1.23 million; Cologne on the Rhine in the west, with 964,000; Frankfurt am Main, a major European financial center, in west central Germany, with 648,000; and Dresden and Leipzig, historic cities and cultural centers in Saxony in the east, each with approximately 450,000 (2000 est.).

FORESTRY AND FISHING.

Almost a third of Germany's total area is covered by forest and although the country has been traditionally a net importer of wood and wood products, it is a significant exporter as well. In 1994 it ranked second after the United States in imports of paper, cardboard, and goods made thereof, and first ahead of Canada, the United States, and Finland in exports. Germany's fishing policy is carried out within the European Community's Common Fisheries Policy (CFP), which is based on the principle of relative stability achieved by established quotas for member states and on exercising control over fish stocks by fixing annual total catch limits.

MINING.

Germany has a distinguished mining tradition, but the industry has taken a minor role in the 1990s and is not able to meet the country's growing needs for energy and raw materials. The chief mining products are brown coal, or lignite, with total reserves at about 43 billion tons, and 24 billion tons of hard coal, or anthracite. Lignite, inexpensive in Germany, is a principal domestic source of energy covering about 26 percent of the electricity production. The country is the world's largest lignite producer, with about 20 percent of global output. Hard coal production, on the other hand, has fallen despite subsidies. In 1950 hard coal accounted for 73 percent of the primary energy consumption in West Germany, but by 1997 its share had fallen to 14.1 percent. Germany imported 12 percent of its coal in 1998, mostly from Poland, followed by Australia, South Africa, and Colombia, and imports were expected to double by 2020, as nuclear power is phased out and hard coal domestic production is further reduced. Oil and natural gas production is mostly limited to the North German Plain and the North Sea, making Germany the third largest oil importer in the world, with primary suppliers Russia, Norway, Libya, and the United Kingdom. Natural gas is imported from Russia, the Netherlands, and Norway.

MANUFACTURING.

The German manufacturing sector is large and robust, with leading branches in chemical products and pharmaceuticals, vehicles and transport equipment, metals and metal products, electrical machinery, precision instruments, paper products, and processed foods. Other products include cement and construction materials, optics, electronics, ships, and textiles. In the eastern states, chief manufacturing sectors are electrical engineering and electronics, chemicals, vehicles, glass, and ceramics. The former state-owned companies in eastern Germany, although receiving significant investments from the west after reunification, are generally more unstable, and it is unclear which of them are to survive. Large portions of the old Communist manufacturing industries in the east have been shut down since unification.

MOTOR VEHICLES.

Germany is the world's third largest automobile maker after the United States and Japan, and with nearly 730,000 employees and annual revenue of almost DM340 billion in 1999, the automobile industry is a crucial economic player. The industry provides markets for many related industries like machine tools, spare parts, tires, plastics and paints, and metal processing. With all suppliers, automotive services and retailers included, a total of about 5 million workers in the country depend on the health of the automobile industry for their livelihoods. Due to the increasing automation of production and the refocusing of manufacturers on core activities, the distribution of value between manufacturers, direct suppliers, pre-suppliers, and distributors is changing, but as a whole, in 1998, the percentage of gross domestic product related to the development, manufacture, sale and use of motor vehicles amounted to almost 20 percent. Car makers, such as Daimler Chrysler, Volkswagen, Audi, and BMW, are well known throughout the world. In 2000, Daimler Chrysler, with its revenue of 162.4 billion euros, was the second largest company in the world. Of the 5.309 million vehicles manufactured in 1999, 64.6 percent were exported mainly to other EU members and to North America, and German companies also produced 3.55 million vehicles in their foreign operations. Manufacturers from western Germany have opened new plants in the eastern states and invested nearly DM7 billion with the purpose to produce 370,000 cars a year. The German automotive industry has traditionally attracted significant foreign direct investments. The car maker Opel was acquired by General Motors of the United States before World War II, and after the war Ford and other industry leaders opened operations in the country.

MACHINERY.

In 1997, Germany accounted for nearly 20 percent of the world's machinery exports (Japan was responsible for 16 percent and the United States for 15.7 percent). In some products, like metallurgical plant equipment, particularly rolling mills, paper and printing machines, and woodworking machinery, German exports amounted to one-third of the world total. With almost 6,500 factories in mechanical engineering, German manufacturers have a reputation for customized machinery of high quality. Among the important products are machine tools, including manufacturing systems, power transmission engineering, air handling, refrigeration, air pollution control, vacuum and compressor equipment, and food processing and packaging technology. Only about 5.5 percent of the factories have more than 500 employees and these are the producers of large, complex machines. Some large, well known machinery manufacturers include Mannesmann Demag, a producer of plant engineering and machine tools with a total of 55,000 employees; Heidelberger Druckmaschinen, a maker of printing and paper machinery with 17,000 workers; the Bosch group, a manufacturer of packaging machines and automation technology with 7,000 employees in its machinery division; and Gildemeister, a producer of sophisticated machine tools with 2,300 employees (all figures from 1997). Over 80 percent of the companies in mechanical engineering, however, are highly specialized small-or medium-sized firms with fewer than 200 employees. In 1997 they had a workforce of 881,000 and combined revenues of DM210 billion, almost two-thirds of which were generated by exports. The German aerospace industry, which employed about 61,000 and generated a revenue of about DM21 billion by 1997, led major European technology cooperation projects, such as Airbus and Ariane.

CHEMICALS.

In 1996 Germany was the largest exporter of chemical products in the world, with a share of 15.5 percent (the United States accounted for 14.4 percent and Japan for 7.5 percent). Its chemical industry, with its state-of-the-art technology, innovative products, and emphasis on research, was represented by corporate giants such as BASF, Bayer, and Hoechst, and by a multitude of small and medium-sized firms. In 1998 the industry employed 484,000 people, including 31,000 in the eastern states and generated sales of DM187 billion, while research and development expenditures reached DM11.3 billion. Nearly two-thirds of the industry output was exported, amounting to DM123.6 billion in foreign receipts. International networks of subsidiaries and branches characterized the large chemical companies, active in all major world regions. In the 1980s and 1990s, the chemical industry of western Germany underwent substantial restructuring processes and a reduction of its labor force by 45,000 people between 1991 and 1994, eliminating excess capacity and restructuring the geographical distribution of their production facilities under changing market conditions, growing international competition, new EU health and environmental regulations, and a shift in demand to environmentally friendly products.

ELECTRONICS.

The electrical engineering and electronics industry, with revenue of DM242 billion and nearly 850,000 employees (1997), is also among the most research-intensive and innovative manufacturing sectors, including makers of production plant electronics, telecommunication systems, electronic components, programmable controllers, medical systems for diagnosis and therapy, household appliances, and others. The sector is dominated by a small number of large firms such as Siemens, Bosch, and IBM Germany. With annual sales of 78 billion euros in 2000 operations in 190 countries, Siemens employed 197,000 workers in Germany, and 203,000 workers abroad. Precision engineering, optical and process control technology, electromedical equipment, and timepieces generated DM52.4 billion in sales 1997, and nearly 2,000 primarily small and medium-sized firms in these industries employed more than 219,000 workers.

OTHER INDUSTRY.

In 1999 Germany was the world's fifth largest producer of steel (after the United States, China, Japan, and Russia) with total production of 42.1 million metric tons, down from 44.0 million tons in 1998. With a workforce of about 830,000, the metal-producing and metal-processing industry generated sales of DM230 billion in 1997. Revenue of DM225.7 billion was reported in 1997 by the food processing industry with a labor force of 503,000. Germany has one of the highest per capita consumption rates of beer in the world and is a major producer of fine dairy products and meat delicacies. Textiles, clothing, and leather goods, some the oldest domestic industries, still play a significant role, employing 245,000 and generating a revenue of DM63 billion in 1997, but most important textile regions lost their significance during the 1980s and 1990s. With 775,000 employees and revenues of DM151 billion in 1999, construction was another important branch of German industry, and the country was considered to be Europe's largest construction market with the relocation of the federal capital from Bonn to Berlin and the eastern states' renovation following the reunification in 1990.

SERVICES

TOURISM.

Although Germany is an attractive tourist destination and foreign visitors spent DM31 billion in 1999, it has a large deficit in the tourism balance of payments . Germans normally enjoy a 30-day paid vacation and many of them travel abroad, spending a total of DM88 billion in 1999 and bringing the negative travel balance to DM57 billion. Yet tourism is an important economic factor as approximately 2.4 million people (including part-time and seasonal help) were employed in the industry and immediately related areas such as travel, restaurants, lodging, relaxation and enjoyment, in 2000. Foreign visitors stay on average between 2 and 3 days, combining a visit to Germany with visits to neighboring countries. Approximately 11.7 million foreign guests visited Germany and about 287 million overnight stays were registered in 1997, including a total of 33.4 million overnight stays by foreign guests. About 15.2 percent of visitors came from the Netherlands, 10.9 percent from the United States, 8.9 percent from Britain, and 5.6 percent from Italy.

RETAIL.

Retail has undergone profound structural changes over the second half of the 20th century, caused by changing consumer behavior and supply chains. Motorization and more economical bulk-buying have favored the spread of hypermarkets, self-service department stores, and discount stores, and many small retailers have gone out of business. Competition has become harder, profit margins have declined, and the retail food and beverage market is increasingly dominated by a small number of large retailers like REWE, Edeka/AVA, Aldi, Metro, Tengelmann, Spar, Karstadt, Kaufhof and Kaufhalle. The 10 largest retailers accounted in 1999 for over 80 percent of the market, up from about 56 percent in 1990. Internationalization of retail is progressing as more German firms develop operations abroad and foreign competitors like Wal Mart or the French Intermarché group enter the domestic market. Mail-order firms actively benefitted from postal services liberalization and the growth of e-commerce . Due to strong competition, prices are low, the product range is wide, and the leisure component of shopping has increased constantly over the 1990s. A boom of new retail facilities has followed the shortage of retail space in East Germany after unification in 1990.

In 1997 retail turnover represented 34.3 percent of private consumption, totaling DM715 billion, and the industry employed nearly 2.7 million people (over 45 percent of them part-time, 33 percent of the total in food, beverages, and tobacco). Additionally, 60,000 commercial agents and brokers and 55,000 motor vehicle dealerships and filling stations employed nearly 700,000 workers. A total of 294,000 firms operated in the market, most of them small: 74 percent had fewer than 5 employees, and only 2,925 enterprises had more than 50 workers. Small and medium-sized retailers have found ways to compete with large ones by catering to individual tastes, specializing in certain types of products, and offering expert advice and personalized service, and have also increasingly cooperated in purchasing, sales, and marketing.

FINANCE.

No sector of the economy has grown as financial services have done over the 1990s. The turnover of the German banks has risen from DM4 trillion in 1988 to DM9.1 trillion in 1997. Savings deposits, stock and security holdings, loans, and cashless payments have all grown. Banking in Germany has traditionally been characterized by the large amount of long-term credit provided to industry and local government and by the regional or local focus of many credit institutions. In the 1990s, however, the industry was looking to foreign markets and turning to the stock exchange.

German banking is represented by private commercial banks, cooperative banks, and Sparkassen (savings banks) organized regionally and supervised and coordinated by the Landesbanken (state banks). Over half of all savings accounts are in the hands of the 563 Sparkassen, usually held by municipalities, and nearly one-third are in the about 1,800 cooperative banks. Germany's second largest fund manager, DekaBank, is owned by the Sparkassen, and the third largest one, Union Investment, by the cooperatives. As of early 2001, there were 340 commercial banks, 13 regional giro institutions, 596 savings banks, the Deutsche Genossenschaftsbank, the central institution of the cooperative Volksbanken and Raiffeisenbanken, as well as 3 regional institutions of credit cooperatives, 2,411 credit cooperatives, the Deutsche Postbank AG, 33 private and public mortgage banks, 18 credit institutions with special functions, and 34 building and loan associations. Nearly every employee in the 1990s had a salary account and more than 40 million had a Eurocheque card and used this international payment system. Credit cards have also grown in popularity: in 1980, roughly 580,000 people were using them, and in early 2001, the number was 15 million. Since 1980 it has been possible to get cash from automated teller machines (ATM), and the electronic cash system was introduced in 1990 and by 2000 was used at more than 140,000 terminals, especially in retail stores and gas stations.

Germany has 3 large commercial banks which dominated the market after World War II: Deutsche Bank, Dresdner Bank, and Commerzbank. The merger of Bayerische Vereinsbank and Bayerische Hypotheken und Wechsel Bank (Hypobank) in the late 1990s created Bayerische Hypo und Vereinsbank (BHV), which was second in size only to Deutsche Bank. In April 2000 negotiations on the proposed merger of Deutsche Bank and Dresdner Bank were suspended due to EU banking regulations and antitrust laws. Deutsche Bank and the other nationwide banks had powerful positions on the boards of some of the largest industrial and commercial companies and were estimated to own 10 percent of total shareholdings in the country. Their role as shareholders came under EU criticism in the 1990s, and banks were expected to divest themselves of many holdings. In late 1998, both Deutsche Bank and Dresdner Bank announced that they would cut their equity holdings, and Deutsche Bank shifted DM40 billion of assets into a separate company. In their move into investment banking the Landesbanken also attracted criticism from private commercial banks, resulting in investigations by the EU competition authorities into the allegedly privileged status of the Landesbanken. During the 1980s and 1990s, growing competition, declining profit margins, and pressures from shareholders to raise profitability have intensified, and banks have expanded into capital market activities in Germany and into investment and other banking activities abroad. Through Allfinanz (offering insurance, asset management, and banking activities at once), large banks have achieved minority participation in large insurance companies, while some insurers have taken over banks. In early 2001, Allianz, a giant insurer, acquired Dresdner Bank, of which it already owned more than 20 percent, creating Germany's largest company.

DEPENDENCIES

Germany has no territories or colonies.

BIBLIOGRAPHY

Behrend, Hanna, editor. German Unification: The Destruction of an Economy. London, and East Haven, CT: Pluto Press, 1995.

Economist Intelligence Unit. Country Profile: Germany. London: Economist Intelligence Unit, 2001.

Embassy of the Federal Republic of Germany, Washington, D.C. An Overview of the Current Economic Situation in Germany . <http://www.german-embassy.org.uk/facts_-_economics.html> . Accessed April 2001.

Federal Statistical Office Germany. <http://www.statistik-bund.de/e_home.htm> . Accessed January 2001.

Germany Online. <http://www.germany-info.org/sf_index.html> . Accessed September 2001.

Smyser, W. R. The German Economy: Colossus at the Crossroads. New York: St. Martin's Press, 1993.

U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html> . Accessed August 2001.

U.S. Department of State. FY 2000 Country Commercial Guide: Germany. <http://www.state.gov/www/about_state/business/com_guides/index.html> . Accessed April 2001.

—Valentin Hadjiyski

CAPITAL:

Berlin.

MONETARY UNIT:

Deutsche mark (DM). One deutsche mark equals 100 pfennigs. There are coins of 1, 2, 5, 10, and 50 pfennigs and 1, 2, and 5 deutsche marks, and notes of 5, 10, 20, 50, 100, 200, 500, and 1,000 deutsche marks. In January 1999 Germany switched to the new European currency unit, the euro, along with 10 other members of the European Union, as a part of the European Monetary Union (EMU) and the European System of Central Banks (ESCB). The euro was in use after 1 January 1999 for electronic transfers and accounting purposes, while euro coins and bills will be issued in 2002, and at that time the German currency will cease to be legal tender. On 1 January 1999, control over monetary policy, the setting of interest rates, and the regulation of the money supply was transferred from the German Central Bank (Bundesbank) to the European Central Bank (ECB) in Frankfurt am Main.

CHIEF EXPORTS:

Machinery, vehicles, chemicals, metals and manufactures, foodstuffs, textiles.

CHIEF IMPORTS:

Raw materials, machinery, vehicles, chemicals, foodstuffs, textiles, metals.

GROSS DOMESTIC PRODUCT:

US$1.864 trillion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$549.0 billion (1999). Imports: US$478.9 billion (1999). [The CIA World Factbook lists 1999 exports of US$610 billion and imports of US$586 billion.]

User Contributions:

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Aug 9, 2011 @ 5:05 am
I am Razaul karim razu from Bangladesh. I love germany. I want to visit in germany. Berlin is my dream city. I must visit germany in my life.

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