Germany has been one of the successful economies in the European Union or the OECD. This paper reviews industrial policy which underpins the country's achievement in competitiveness and welfare, tracing the main features of industrial policy, its rela...
Germany has been one of the successful economies in the European Union or the OECD. This paper reviews industrial policy which underpins the country's achievement in competitiveness and welfare, tracing the main features of industrial policy, its relation to social policy, and new challenges of globalization. Until the 1990's, the industrial policy could be harmonized with the social policy, because it had ensured high wage employment, high value-added products and high world market share. Furthermore, the industrial policy process has put a strong emphasis on agreement among decision makers and also their balance in influence on the policy process. However, conflicts between the two policy areas have been generated by the globalization, which makes the border-crossing transfer of capital and labor easier and faster. "Agenda 2010" is the reform package of measures to restructure the welfare state quite radically in order to improve incentives and lower costs. This is an important transformation of social policy, as the labor market and the welfare state are strongly linked. The ongoing social experiment in Germany might provide a clue to find answers to the question of how the European production regime will respond to the impacts of globalization and neo-liberalism with a strong market orientation.