Photo Gallery Weak Infrastructure Spending in Germany
From the outside, Germany appears to have a robust economy. But a new study by a leading economic institute reveals that the country is investing far too little in infrastructure and its future, effectively saving itself to death. Meanwhile, with a federal election looming, German Chancellor Angela Merkel and her challengers are busy praising the strength of the economy.
Germany's infrastructure investment gap compared to the euro zone.
Germans save more money than most living in the industrialized world, but they invest very little in their future, making them much weaker economically than leading politicians realize. But according to a new study by the German Institute of Economic Research (DIW), Germany is saving itself to death. One area in serious need of investment is the country's roadway system.
A comparison of national savings rates across the world.
Which countries invest the most domestically?
The Berlin institute points to a chronic lack of investments as the main cause for low job productivity, too. Both the state and the private sector spend too little money on infrastructure, education, plants and machinery, according to the DIW.
Germans invest heavily abroad, but less at home.
Bridges are crumbling, factories and universities are deteriorating, and not enough is being spent to maintain phone networks. This has resulted in a massive impoverishment of the country, according to DIW calculations.
National rail provider Deutsche Bahn should actually be expanding important transportation hubs like Cologne and Hamburg, meeting international obligations like the Fehmarn Belt crossing between Germany and Denmark, and improving noise-reduction measures along freight routes. But there is little to no funding available for all of this. "We have to make up our minds in Germany," says Volker Kefer, the board member responsible for technology. "Either the federal government invests more money, or we will soon reach our capacity limits."
How do Germany's national infrastructure investments compare to other countries?
There is a dearth of cash to implement one of the country's key industrial projects for the future, the Energiewende, a plan to phase out nuclear energy and massively increase its reliance on renewable sources. Here, windmill blades await transport in the eastern state of Brandenburg in June 2013.
The Waldeck pump-storage power plant, shown here, is one project that has been put on hold in the Energiewende project due to unclear conditions in the energy sector that made the investment too risky.
It's hard to believe, but when it comes to one of the most important technologies of the 21st-century, namely building a nationwide high-speed Internet network, Germany is in danger of lagging behind the rest of the international community.
Germany also needs to invest heavily in early childhood education. "In order to keep pace internationally, we would have to significantly improve the ratio of caregivers to children," says one day care manager. "But we don't just need more caregivers -- we also need to give them better pay to make the profession more attractive."
Germany's state investment in child care is low compared to that of other nations.
"It's about the right priorities," says DIW head Marcel Fratzscher. "It's about the question of whether Germany should focus on consumption and fiscal transfers or on investments." He urges a course that is "clearly in favor of investments."
