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A photo of a Euro coin on a map of Europe.

German economy played a crucial role in E.U.

The German Model

October 2013, Number 04.04

“Economic security, understood as the continuous fulfillment of the conditions required to sustain economic welfare, is crucial to stability and prosperity in Germany. Welfare should not be confused with growth of the gross domestic product (GDP) alone, but encompasses wealth distribution and external effects not measured by GDP, such as a healthy environment. However, at its core, economic welfare is the production and consumption of goods and services, either via market-oriented commercial activities, to a large extent private business or by households, and the public sector provision of public goods and services. In a modern capitalist system with a monetized economy, wealth includes not only physical and human capital, but also financial wealth, making a stable financial system a core part of economic security.

Economic activity depends on many conditions for sustainable execution:

  • Politically, it depends on a reliable legal and institutional framework such as property rights or contractual law;
  • Ecologically, it depends on the absence of environmental catastrophes such as floods or droughts;
  • Economically, it depends on access to crucial inputs such as raw materials, capital, labor and knowledge;
  • Financially, it depends on a stable monetary and financial system preventing inflation and reducing the risks of capital loss...”

Excerpt from Michael Dauderstädt, “The German Model,” per Concordiam: Journal of European Security Defense Issues  4, No. 4, 2013: 24-29.

Dr. Michael Dauderstädt was director of the Division for Economic and Social Policy of the Fredrich Ebert Foundation (FES), a nonprofit think tank, until September 2013. He has worked with the German Foundation for International Development, served as head of the International Policy Analysis Unit and was director of the Division for Economic and Social Policy of the FES. Dr. Dauderstädt studied mathematics, economics and development policy in Paris, Berlin and Aachen, Germany. His research focus is international political economy, European integration and German economic policy.

This article reflects the views of the author and are not necessarily the official policy of the United States, Germany, or any other governments.