Gross domestic product in this country recorded a small decrease last year. But this is apparently mainly due to the fact that Germany is not sufficiently exploiting its potential in future technologies such as AI, as a new study shows.
The gross domestic product (GDP) for Germany in 2023 looks good on paper at around 4.19 trillion euros. However, if you look at the figure adjusted for price, it shows a decrease of 0.3 percent compared to the previous year.
In nominal terms, GDP has risen sharply, which can be attributed to inflation. In reality, however, the German economy is not doing so well.
Even compared to other industrialized nations, Germany is missing out on a lot of potential, as a new study by the German Economic Institute (IW) shows. According to the study, more than 410 billion euros in additional gross domestic product could be generated in this country.
These future technologies could increase GDP
According to the IW study, the greatest potential for increasing the gross domestic product in Germany lies in the area of education. If there were relatively as many degrees in computer science and similar subjects in Germany as in Estonia, this could boost the economy by more than ten percent.
A similar increase could be achieved if Germany invested more in future technologies. In terms of investments in computers, databases and software, it would have to be on a par with the USA. A possible increase in GDP per capita growth of more than ten percent would also bring about an influx of students from abroad similar to that in Australia.
But increasing the employment rate of those born abroad in proportion to efforts in Iceland would also enable a similar increase.
“Germany is leaving too much potential untapped,” said IW director Michael Hüther. It is not necessary to perform miracles to exploit this potential. It is enough to catch up with other nations, especially in the areas of digitalization, innovation and education.
Better incentives for venture capital, clear regulatory frameworks and the promotion of digital and data-driven business models can significantly strengthen Germany's future competitiveness.
Investments in AI and digitalization
According to the study results, the future technology of artificial intelligence could also significantly increase economic growth in Germany. If there were as many new companies in this field as in Israel, this could result in an increase of 5.9 percent.
A similar level of digitization of justice and administration as in South Korea would have a potential of 2.8 percent.
But innovations could also help the German economy to grow. If a similar number of patents were registered here as in Japan, this could mean a GDP increase of around 8.5 percent. So far, the number of patent applications in information and communication technologies is four times higher than in Germany.
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Source: https://www.basicthinking.de/blog/2024/09/10/deutschland-zukunftstechnologien/
