Americans have at least three advantages over Europeans. “Germany will helplessly lose its competitiveness if cheap energy does not come back,” says the professor from Berlin.
BERLIN Can the employment contract be concluded by e-mail or is it still necessary to print it on paper? This is one of those that employed decision makers topics at the beginning of the year in Germany.
At the same time, big innovations are being made in the United States in information technology, biotechnology, aviation, space technology, renewable energy, artificial intelligence and financial technology.
Here is the difference between the current development of Europe and the United States in a nutshell.
In Europe, we are dealing with bureaucracy, while in the United States, world-changing breakthroughs are being made in flourishing startup companies and research institutes.
After the corona and war years, the United States is catching up in terms of competitiveness even faster than before. Europe has a competitiveness crisis, describes the British newspaper The Financial Times.
The United States has at least three trump cards.
1. Immigration
First, the United States has a “highly flexible” labor supply.
– People criticize immigration, but it is a source of economic growth. People coming to the United States do not receive social assistance, it is not possible. In the United States, it is very difficult to get money for free, says the professor of economics at Humboldt University in Berlin Michael C. Burda.
On the other hand, the United States has very low wages and a lot of poverty by European standards.
– Companies employ immigrants and benefit from them. In this sense, population growth is a good competitiveness enhancer in the US, but not in Germany.
2. Distance from war
The US economy has not suffered much from Russia’s war of aggression in Ukraine.
The competitiveness of the German economy, on the other hand, has been based on cheap imported energy, that is, in practice, Russian oil and gas. It’s gone now.
– This means that the German economy will inevitably lose its competitiveness, unless cheap electricity can be recovered from somewhere.
Nuclear power has been phased out in Germany and large wind farms are being built.
– Solar energy can perhaps be imported from Spain or hydrogen can be produced in Libya and Italy. But renewing the energy base requires huge investments in new technology, says Burda.
3. Big investments
The US economy grew strongly last year, and this year looks good too.
In part, it is thanks to public investments that are larger than in Europe. The state’s billion-dollar investments in climate-friendly production improve the competitiveness of the United States.
Read more: The United States is starting to threaten European industry in a surprising way – the EU, which is drifting into the underdog, may even end up in a trade war.
The world economy has started to block after the corona pandemic showed the risks of global trade. The world economy changed permanently.
Now there is a technological and digital cold war, dominated by China and the United States. Germany has neglected to invest in digitization, which backfires now.
In American technology circles, Europe is already called the “second world”.
– Europe is increasingly seen as a museum of well-being, where people do go on vacation, but not as a continent where exciting technological development or economic dynamism is emerging, director of the Kiel Institute for the World Economy IfW Moritz Schularick picture Handelsblatt in the interview.