Globalisation and economic effects on Germany

Globalisation and economic effects on Germany

Globalisation and economic effects on GermanyIntroduction'Globalisation' can be defined as a process by which the people of the world are unified into a single society functioning together. This process is a combination of economic, technological, sociocultural and political forces (Sheila L. Croucher, 2004).

Globalisation is the movement of goods, services and money capital, or investment across international boundaries, and in this way becomes a predominately economic phenomenon sweeping the world. Throughout this, what were formerly national companies become international conglomerates. Hence, countries are no longer seen as independent and closed sovereign states, but as part of one big economy (Wells, Sheuy & Kiely, 2001).

Globalisation not only has positive aspects on the economy for Germany, but there are negative aspects on the economy in Germany as well.

I believe globalisation has more positive impacts than negative impacts on Germany and Daimler AG will be used for an example of supporting this. I will then explain four key impacts for globalisation as well nullify some of the main counterarguments.

ArgumentsGlobalisation has positive impacts on the economic life in Germany. But not only Multinational Companies profit about globalisation, also medium size companies need the economic globalisation for their business (Lane, 2000).

Germany is a small country in the middle of Europe with a population of 82 billion. As an industrial country, Germany transfers products all around the world (CIA, 2008). Germany is one of the biggest countries of exportation worldwide, exporting everything from luxury cars to industrial machinery to an eager world. Germany is interested in open markets (Purvis, 2008). Germany's most important trading partners are France, USA and Great Britain, and is interested in increasing trade with Asia and India. Germany has different states and all states are differently affected in the economic globalisation.

Bavaria, Baden-Wuerttemberg and North Rhine-Westphalia are integrated more than average into the globalisation process through increasing international goods traffic. The globalisation of financial markets affected Hessen, especially the financial centre Frankfurt. Northern Germany is affected by the globalisation process through its special orientation towards the trade and transportation sectors which provide services for foreign trade. The direct effects of the globalisation are smaller in the new federal states of Germany, though all the states need globalisation for their business (Toepfer, 2006).

For German companies the globalisation and the positive aspects are important. It brings chances and opportunities for the German economy. Globalization offers an open world economy for actors to compete in a positive-sum game; all players have changed to win. Now in this 'efficient free market,' production can be transferred overseas to drive out competitors and to lower production costs (Weizsaecker, 2003).

An excellent example is Daimler AG with 272,382 employees all over the world. 166,679 are in Germany, 24,053 in the USA and another 81,650 in the rest of the world. Daimler AG is currently trying to enter the Asian market, the biggest market in the world. One imported point is Daimler AG presenting his new car at Auto China in Beijing. This was a milestone in Mercedes-Benz history.

The premium auto maker's is also the first Mercedes to celebrate its world premiere in China. This success is very good for the German economy because Daimler AG had the most employees and locations in Germany. The company plans to enlarge the position in Germany. Daimler is a typical German car and it is very important to Daimler AG that all their cars are "made in Germany" (Daimler AG, 2008).

The surging economy has pushed Germany's unemployment below 10% since 2004.

One of the best examples is Baden-Wuerttemberg the real turnover increased about 6.5% in the first 6 month in 2008. The state created more than 28,000 workstations in the last year.

The reason for the increase of the economy is due to China, India and Brazil buying a lot of machines and cars from this state. Baden-Wuerttemberg is the home state of a lot of successful company's e.g Porsche, Bosch and WMF (Schneider, 2008).

A developed and well-functioning innovation system is of central importance for the German production policy of diversified quality production, relying on continual technological updating of products. Germany needs a lot of high skill workers, but the employment market does not have many at the moment, so Germany needs workers form other countries. Globalisation and especially the European Union offer these workers. They need no visa and most degrees are accepted. Now it is easier for companies to hire a worker from another country than in the past (Weizsaecker, 2003).

CounterargumentsOn the other hand, globalisation does have negative impacts on Germany as well. I will explain the most important counterargument of anti globalisation.

One of the greatest arguments against Globalisation is that Germany misuses and abuses poorer struggling third world countries. Following from this, some would argue thatGermany companies and corporations see people in third world countries as cheap and inexpensive labour that can easily be controlled and manipulated.

This misuse of people is easily allowed because people in struggling countries do not have the choice to use or cannot afford legal protection when companies endorse dangerous working conditions. It is also allowed for the reason that labourers in third world countries are poor and desperate for money and will work for much less than people who are skilled and educated (Toepfer, 2006).

But the world had created an international organization designed to supervise and liberalize international trade. The World Trade Organization's (WTO) main mission is further specified in certain core functions serving and safeguarding five fundamental principles, which is the foundation of the multilateral trading system.The goal is to help producers of goods and services, exporters, and importers conduct their business (WTO, 1995).

Some would argue that national job losses are big problems in Germany. The majority of union employment depends on the manufacturing and industrialized division of the economy. This sector has been most negatively affected by globalisation as international companies and corporations increasingly take advantage of unskilled cheap labour abroad, especially in low waged countries (Weizsaecker, 2003).

Consider them current unemployment rate shows different. The nation unemployment decreased from 10.2% in January 2007 to 8.7% in January 2008. Therefore, those responsible are the strong business with other countries and resulting of creating new workstations (Tagesschau, 2008).

Lastly, Anti-global activists claim that multinational institutions destroy the environment and boost the air pollution. They believe that it sanctions and promotes policies which enable multinationals to escape trade-barriers on business practices. These organisations accuse corporations and companies of dominating the politics of third world governments.

They believe that globalisation economic super powers easily and knowingly exploit the environments of struggling third world countries. Poorer countries are easily convinced to ignore laws about air pollution and environmental harvesting when it benefits the economies and their nations financial system (Toepfer, 2006).

Edward M. Graham, on the other hand claims, that there is no evidence that economic activities are creating "race to bottom," but there is evidence that foreign direct investment creates a "race to top," for example; replacing dirty activities in fast-growing nations with cleaner ones or by transferring pollution abatement technologies to developing countries.

Graham also notes, however, that direct investment contributes to economic growth in developing nations and, because nations are in the early stage of development tend to witness environmental degradation as a consequence of growth. There is some connection between direct investment and this degradation (Graham, 1996).


Thus, as can be ascertained from the above discussion, globalisation has more positive than negative impacts on Germany's economic life. I still believe globalisation in Germany has a positive impact overall. South Germany in particular has a rapidly increasing industry; the German unemployment rate is decreasing. Germany especially needs the globalisation as it is one of the biggest countries of exportation worldwide. Globalisation is very important in the world today, for both the company and employees. From the company perspective, they need a lot of high-skill workers from all over the world with different skills and ideas.

For employees, globalisation is important for personal satisfaction as well as gaining the skills and knowledge from different backgrounds and different countries. There is only one negative aspect that needs to be changed. The most usual Germans; for them, globalisation is a dirty word. Ten years ago, Germans were evenly divided on whether globalization presented more opportunities or risks (Allensbach Institute, 2006). Perhaps the true economic effects of globalisation on Germany can only be judged sometime in the future.

That is, perhaps the negatives and positives associated with globalisation will 'work themselves out' over time and a true judgement of the globalisation ideology can be made. But changes need time and while I believe globalisation in Germany is good; it will take a long time before the negative aspects are minimized, and the positive aspects maximised.


  • Bundesagentur fuer Arbeit (2008, April). Arbeitsmarkt. Retrieved June 2, 2008 from Tagesschau, Web site:
  • CIA (2008, May 15). Germany. Retrieved June 4, 2008 from USA, Central Intelligence Agency Web site:
  • Daimler AG (2008, January ). Daimler im Ueberblick. Retrieved June 1, 2008 from Daimler AG, Stuttgart Web site:
  • Weizsaecker. C. (2003). Logik der Globalisierung (1st ed.). Berlin: Vandenhoeck & Ruprecht.