The value of human capital and manufacturing - Business Works
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The value of human capital and manufacturing

HE Georg Boomgaarden, German Ambassador © D Embassy
HE Georg Boomgaarden, German Ambassador, delivered the prestigious annual Tacitus Lecture at Guildhall in the City of London yesterday evening. He made many wise observations on the state of the European economy, Anglo-German relations and the current economic problems, but he also highlighted a number of critical factors that account for Germany’s continued success. The value of human capital and the importance of manufacturing (and hence export) caught the ears of Business Works so we are reproducing a part of his Lecture here below:

... so, what of the future?


Germany will continue to be an exporting nation. There is a lot of demand for German manufactured goods all over the world. We cannot always compete on price - but are unbeaten in quality. Our wealth is our human capital.

Vocational training is one of the reasons for Germany’s economic success. In the current demographic situation, we cannot afford to waste talent.

It is important to bring out every single person’s potential by giving access to world-class universities as well as an efficient system of vocational training.

Research and Development is another field for nurturing success. With the excellence initiative to promote competition among our best universities and with institutions like the Max-Planck- Institutes for high level research and the Fraunhofer Institutes for bringing innovation into production, we are trying to keep the competitive edge.

The growth of the German economy last year was bolstered by exports particularly in the first six months. But then the situation changed.

Over the year, only 30% of growth was due to exports, 70% of growth came from the domestic market - some of that from increased consumption, but the greatest part from domestic investment in goods and services.

This shows a great confidence in the future of the German economy.

When the reforms in Germany were criticized some years ago, I always insisted: We are not just repairing our economy – we are preparing it to challenge the future. Germany is preparing for the future - and we see manufacturing as still having a bright future in Germany.

Manufacturing still accounts for nearly 25% of German GDP, which is more than twice the figure for the UK. This is only sustainable if companies remain at the forefront of technological progress. Our manufacturing sector is highly capital and research intensive.

As in all advanced economies, we will also have a greater role for services in the economy. But services need somebody to serve, so services in Germany grow together with the customers being served.

Services in Germany have become much better in the last years, but there is still some way to go. Germans are not willing to pay much for services - and before accepting bad quality service, they tend to do it themselves. But we expect fast growing demand for all services, especially in the care and health sectors.


The German Embassy:

The Tacitus Lecture has been brought to the City of London by the Worshipful Company of World Traders annually since 1988. The prestigious “sell out” event was held at Guildhall in the presence of the Lord Mayor of London, members of the Company and many other dignitaries.

The Worshipful Company of World Traders:

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