Made in Germany Faces Reckoning as Schularick Says Export Model Has Peaked
Economist Moritz Schularick warns ‘Made in Germany’ has lost edge after geopolitical shocks and policy inertia, calling for faster innovation and resilience.
Germany’s long-standing “Made in Germany” reputation is under renewed scrutiny after leading economist Moritz Schularick told a ZEIT podcast that the country’s export-led, industrial growth model has reached its limits. Schularick, president of the Kiel Institute for the World Economy, argued that repeated external shocks and a pattern of political and regulatory inertia have eroded traditional advantages. His diagnosis frames the debate over whether Germany can transform its economy without abandoning its industrial base.
Schularick: Export Model Has Peaked
Schularick told interviewers the old model—centered on manufacturing dominance and export strength—no longer guarantees broad prosperity. He said competitive edges that once flowed from engineering excellence and established supply chains have become easier for rivals to replicate. For Schularick, the central test is whether German institutions and firms will permit more experimentation and tolerate temporary setbacks in pursuit of new technologies.
Recent External Shocks and Economic Strain
The economist points to a string of disruptive events—military conflicts, energy market turbulence and international trade shifts—that have exposed structural vulnerabilities. Energy price shocks and supply interruptions in recent years hit industrial costs, undermining margins for energy-intensive sectors that were pillars of exports. Persistent inflation and demand uncertainty have compounded those pressures, reducing the buffer that exports previously provided against domestic weakness.
Corporate responses have illustrated the stress: several large German groups have cut jobs and reorganized operations amid falling margins and strategic recalibration. Those moves, Schularick says, reflect immediate cost management but also highlight a deeper need to re-evaluate business models for a more volatile global economy.
Structural Drag: Regulation and Reform Failures
A central pillar of Schularick’s critique is political and administrative sluggishness. He argues that bureaucratic complexity, stringent regulation and long legislative cycles have made it harder for firms to adapt quickly. The result is not just slower change but a reluctance to embrace failure as a learning mechanism—an attitude he sees as antithetical to rapid innovation.
This governance drag also affects public investment priorities and social-policy debates, from pension reform to digital infrastructure. Schularick contends that when major policy choices are deferred or contested for years, businesses face added uncertainty that discourages long-term bets on new technologies.
Why Innovation Pace Matters
Schularick emphasizes that many technological advantages are now transient: design and process innovations that once ensured decades of market leadership can be imitated rapidly. To maintain relevance, he says Germany must increase the pace of experimentation within firms and allow more risk-taking in public policy. That means easing barriers to startup formation, streamlining regulatory approvals for new products and accepting a higher short-term failure rate as the cost of discovery.
He frames “trial and error” as a practice rather than a slogan—one that requires changes in corporate governance, finance, and labor-market flexibility so resources can flow faster to promising projects.
Policy Options Without Big Spending
Despite the diagnosis, Schularick expresses caution about large-scale fiscal bailouts as the primary remedy. He points to targeted reforms and smarter use of existing frameworks to boost competitiveness without requiring vast new expenditures. Measures could include regulatory simplification, incentives for private R&D, faster permitting for critical projects and focused support for sectors where Germany still has clear advantages.
Schularick also highlights resilience measures—improving energy security, diversifying supply chains and strengthening workforce retraining—that can raise the floor for firms navigating uncertainty.
European Single Market as a Lever
For Schularick, the European single market remains a key strategic asset that Germany can leverage without shouldering the entire burden of transformation alone. Deeper integration on industrial standards, research collaboration and cross-border investment can amplify domestic reforms. He argues that coordinated European action on regulatory harmonization and strategic supply chains could help preserve manufacturing capacity while enabling a shift toward newer technologies.
At the same time, Schularick warns that relying solely on European frameworks is insufficient if domestic institutions continue to slow change.
Germany’s challenge, as framed by Schularick, is to reconcile the continuation of industrial production with a faster, more experimental approach to innovation. The “Made in Germany” label may no longer guarantee automatic dominance in legacy industries, but it still represents a foundation on which a renewed strategy could be built. Whether policymakers and business leaders will accept the short-term disruptions that come with structural renewal remains the defining question for Germany’s economic future.
