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Inward Investment and the Drivers of Post Recession Recovery in Germany

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  • Driffield Nigel
  • Temouri Yama

    (Economics and Strategy Group, Aston Business School, Aston University, Aston Triangle, Birmingham, B4 7ET, United Kingdom)

Abstract

This paper examines changes in the drivers of productivity in Germany over the period 1997-2012. We start by comparing the performance of German firms and inward investors before and during the recovery from the recent global financial crisis of 2008 across a range of sectors, and subsequently examine the channels through which different firms are able to generate productivity. Our results show that foreign investors are more productive than German MNEs and purely domestic firms, with the gap narrowing in the manufacturing sector, but growing in the service sector during the recovery period. We also contrast those firms for whom productivity growth is related to greater use of intangible assets, compared with those for whom productivity is linked to cash flow. Productivity of inward investors is driven by cash flow rather than intangible assets, these being limited to high-technology investors from the EU and the USA.

Suggested Citation

  • Driffield Nigel & Temouri Yama, 2014. "Inward Investment and the Drivers of Post Recession Recovery in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(6), pages 775-799, December.
    • Handle: RePEc:jns:jbstat:v:234:y:2014:i:6:p:775-799
    DOI: 10.1515/jbnst-2014-0607
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