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2004 OECD Economic Surveys: Germany 2004

image of OECD Economic Surveys: Germany 2004

Germany’s strong export performance is helping to restore growth, but in this 2004 review of Germany’s economy, OECD suggests further measures to create confidence and strength in the economy. In particular, OECD carefully examines linking fiscal consolidation to public sector reform, measures to create employment, and fostering product market competition. This edition’s special feature looks at how to improve Germany’s capacity to innovate.

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Fostering Product Market Competition

As outlined in the 2003 Economic Survey, pro-competitive regulation of product markets can contribute to improving productivity performance, in part through stimulating innovation (see Chapter 5). Recent empirical evidence also shows that a regulatory stance conducive to product market competition increases investment, as producers in competitive markets have stronger incentives to expand production capacity when product demand increases.93 Competitive product markets, by reducing monopoly rents, also encourage wage moderation, especially in countries with unionised wage bargaining, such as Germany. The government has embarked on a number of reforms since the previous Economic Survey, notably in the handicrafts sector, which move the economy towards a more pro-competitive stance. However, scope for improvement remains. In the network ...

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