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The Rise and Fall of German Innovation

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  • Naudé, Wim

    (RWTH Aachen University)

  • Nagler, Paula

    (Erasmus University Rotterdam)

Abstract

In this paper, we describe the historical co-evolution of innovation and economic growth in Germany since 1871. The country's rise as an industrial power in the late 19th century, through its innovation and entrepreneurial performance, is contrasted with the post-World War II period. This latter period, although it contained the German economic miracle, was nevertheless a period during which innovation went into relative decline. We document this decline and offer four broad, interrelated explanations: (i) an innovation system locked into incremental innovation, (ii) a slowdown in the diffusion of technology, (iii) weaknesses in the education system, and (iv) entrepreneurial stagnation. Implications for policy are noted. Our paper contributes to the growing literature attempting to understand the decline in business dynamism that characterises many advanced economies.

Suggested Citation

  • Naudé, Wim & Nagler, Paula, 2021. "The Rise and Fall of German Innovation," IZA Discussion Papers 14154, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp14154
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    Cited by:

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    3. Thomas Gries & Wim Naudé, 2021. "Extreme Events, Entrepreneurial Start-Ups, and Innovation: Theoretical Conjectures," Economics of Disasters and Climate Change, Springer, vol. 5(3), pages 329-353, October.
    4. E. Klein & E. Fouksman, 2022. "Reparations as a Rightful Share: From Universalism to Redress in Distributive Justice," Development and Change, International Institute of Social Studies, vol. 53(1), pages 31-57, January.
    5. Burghard, Uta & Breitschopf, Barbara & Wohlfarth, Katharina & Müller, Fabian & Keil, Julia, 2021. "Perception of monetary and non-monetary effects on the energy transition: Results of a mixed method approach," Working Papers "Sustainability and Innovation" S04/2021, Fraunhofer Institute for Systems and Innovation Research (ISI).
    6. Lee, Minwoo & Lee, Dongchan & Park, Myeong Hyeon & Kang, Yong Tae & Kim, Yongchan, 2022. "Performance improvement of solar-assisted ground-source heat pumps with parallelly connected heat sources in heating-dominated areas," Energy, Elsevier, vol. 240(C).
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    More about this item

    Keywords

    entrepreneurship; inequality; innovation; productivity; technology;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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