The Rise and Fall of German Innovation

Wim Naudé and Paula Nagler ()
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Paula Nagler: Erasmus University Rotterdam

No 14154, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: entrepreneurship; inequality; innovation; productivity; technology (search for similar items in EconPapers)
JEL-codes: D31 L26 O33 O38 O52 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2021-03
New Economics Papers: this item is included in nep-ent, nep-his, nep-ino, nep-sbm and nep-tid
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Citations: View citations in EconPapers (8)

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