Is germany´s international competitiveness on a decline?

Infrastructure

Without any doubt one of the biggest achievements of Germany on the global competitiveness scale is its exceptional infrastructure system. The country is an unquestionable world leader and has been rated at first place for three consecutive years in the GCR (2007-2010). All 8 indicators[1] according to which the evaluation has been made are under the 10th position and have beenconstantly improving over the past 3 years.

After the reunification in 1990, the roads and the transport system in Eastern Germany have gone through a significant upgrade in order to reach the development of the western states, resulting in a high class transport network throughout the entire country. The railroad network is also very well developed and widely spread and recently (2006) therailroad market has gone through a number of reforms: it has been “liberalised cautiously. Track is managed by DB Netz, asubsidiary of the former monopolist, Deutsche Bahn (DB). DB Netz charges all
carriers, DB as well as its competitors. Since January 2006 DB is supervised by the new Federal Network Agency, which is in charge not only of securing fair conditions for third-party access to therailway network to foster competition,but also of approving the pricing structures of dominant players to prevent the abuse of market power. So far, competition is marginal and the partial privatisation of DB, scheduled for late 2008, is expected to have only marginal effects on competition as DB will continue to be in charge of managing the railway network.”[2]

For the quality of German motorways(with total length of 12,500km) the introduction of an automatic toll collect system for lorries played a key role. Despite of the three year delay and the two law suits that the German government was forced to file against the consortium responsible for setting up and maintaining the new system[3], the benefits proved to outweigh the drawbacks. The annual revenue of the road taxes amounts to morethan €3bn and unlike in other countries, it is almost fully reinvested in maintenance of the existing motorways.

Port and airport infrastructure are also rated very high by the GCR 2009-2010- at 5th and 4th places respectively and play an important role in the country’s export oriented economy. Hamburg is the biggest domestic port but nevertheless, the most important port for Germany in terms offreight revenue is Rotterdam in the Netherlands. Together with the other major freight terminals in Bremen, Wilhelmshaven, Luebeck and Rostock the total amount of goods transshipped for 2005[4] is larger than 285 million tons.

The quality of electricity supply is facing strong competition and has dropped from the 3rd to the 7th position in the period 2007-2010. Germany imports aroundthree-fourths of its primary energy requirements, including almost all of its oil, which accounted for 35% of primary energy consumption in 2006[5]. In 2001 the government accepted a plan for gradual withdrawing from nuclear power which currently provides 22% of the country’s electricity production. The plan previews that by 2020 all nuclear power stations should be completely shut down and replaced byalternative electricity sources. However, the high cost of these alternative sources (mainly gas and coal) may cause the extension of the operating times of nuclear stations despite the significant amount of subsidies that have been paid.[6] Germany’s electricity prices used to be among the highest in Europe until 1998 when the European Union implemented liberalization directives which allowedprivate companies to enter the sector.

Similarly to the electricity sector, the telecommunication sector also faced changes under EU’s liberalization directives which ended the monopoly of Deutsche Telecom on the fixed-line market and the company was largely privatized. However, the overall importance of this market segment has decreased over the last few years making space for numerous mobile...