CEOs that have collected experience in a not-for-profit organisation remain a rare thing but hiring them could bring a different kind of leadership style to a firm that creates some benefits.
I apologize for going off-topic. I came across this study (https://www.iwkoeln.de/presse/pressemitteilungen/christian-rusche-geldabfluesse-in-deutschland-so-hoch-wie-nie.html) which reveals that in 2022, Germany made foreign direct investments of 125 billion euros, compared to only 10.5 billion euros of foreign direct investments in Germany. The causes identified include American subsidies, non-competitive energy costs, excessive reliance on old-school engineering tradition, limited political and commercial responsiveness to sectors with greater growth potential, a single technological champion (SAP), and a static and fragmented financial system. According to the latest forecasts from the IMF, Germany is projected to be the only G7 country to experience a contraction in growth in 2023, at a rate of 0.1 percent. Out of the last five quarters, only two have shown positive signs.
While the situation is evolving, if we add the following factors to the ones listed above:
1- The end of the internal combustion engine and European de-risking in China
2- Challenges and costs for low-income groups in the ecological transition
3- Having to contend with ideological impulses that lead to irrational choices such as rejecting nuclear power
Then the risks of triggering a vicious circle increase, in which anti-European voices gain strength. At the same time, a weakened Germany drags down Italy, whose economy can be considered closely intertwined with that of Germany (as exemplified by the production chain involving northeastern Italy), and subsequently affects the entire continent in a cascading manner.
This is indeed a major problem for the EU overall, but Germany in particular. First, the Inflation Reduction Act has attracted far more investments in the US from European companies than anticipated simply because by investing in the US, companies get tax breaks and subsidies that they don't get in the EU. The EU is working on its own green investment programme but while I expected the EU to finalise its programme in 2023, it now seems that the resistance of central European countries and the argument between France and Germany around nuclear and gas power mean that a resolution will only be found in 2024. But the more EU is asleep at the wheel, the more of the investments will go to the US.
The essence of the Whole Nation Strategy is that China wants to become independent from Western imports while becoming a major exporter of high tech. In other words, demand for German and European high-tech is likely to shrink while competition for exports to the US, Europe and other Asian countries is likely to increase because of China.
For Germany, this has all the makings of a potential lost decade because to get out of this troublesome spot we need EU industrial policy to compete with the US and China as well as a rethink of the German (and European business model) of exporting to China and other Asian countries. Europe needs to become more self-reliant and open up exports to other markets more. But this takes years to accomplish.
And just in from an analysis of Capital Economics about the problem European EV car makers face from Chinese competition:
"More generally, the EU does not have as much fiscal firepower as the US to subsidise its infant EV industry. So with Europe out-gunned by the US and China in the “race” to lead global EV production there is a risk that the European auto industry will gradually lose market share, with negative consequences for trend economic growth in the major auto producers including Germany"
I apologize for going off-topic. I came across this study (https://www.iwkoeln.de/presse/pressemitteilungen/christian-rusche-geldabfluesse-in-deutschland-so-hoch-wie-nie.html) which reveals that in 2022, Germany made foreign direct investments of 125 billion euros, compared to only 10.5 billion euros of foreign direct investments in Germany. The causes identified include American subsidies, non-competitive energy costs, excessive reliance on old-school engineering tradition, limited political and commercial responsiveness to sectors with greater growth potential, a single technological champion (SAP), and a static and fragmented financial system. According to the latest forecasts from the IMF, Germany is projected to be the only G7 country to experience a contraction in growth in 2023, at a rate of 0.1 percent. Out of the last five quarters, only two have shown positive signs.
While the situation is evolving, if we add the following factors to the ones listed above:
1- The end of the internal combustion engine and European de-risking in China
2- Challenges and costs for low-income groups in the ecological transition
3- Having to contend with ideological impulses that lead to irrational choices such as rejecting nuclear power
Then the risks of triggering a vicious circle increase, in which anti-European voices gain strength. At the same time, a weakened Germany drags down Italy, whose economy can be considered closely intertwined with that of Germany (as exemplified by the production chain involving northeastern Italy), and subsequently affects the entire continent in a cascading manner.
What could be possible solutions?
This is indeed a major problem for the EU overall, but Germany in particular. First, the Inflation Reduction Act has attracted far more investments in the US from European companies than anticipated simply because by investing in the US, companies get tax breaks and subsidies that they don't get in the EU. The EU is working on its own green investment programme but while I expected the EU to finalise its programme in 2023, it now seems that the resistance of central European countries and the argument between France and Germany around nuclear and gas power mean that a resolution will only be found in 2024. But the more EU is asleep at the wheel, the more of the investments will go to the US.
Second, Germany and the U depend heavily on exports to China, but China is not only slowing down, but has also committed this year to the Whole Nation Strategy (https://www.bloomberg.com/news/articles/2023-03-05/china-emphasizes-whole-nation-stance-on-tech-as-us-curbs-bite).
The essence of the Whole Nation Strategy is that China wants to become independent from Western imports while becoming a major exporter of high tech. In other words, demand for German and European high-tech is likely to shrink while competition for exports to the US, Europe and other Asian countries is likely to increase because of China.
For Germany, this has all the makings of a potential lost decade because to get out of this troublesome spot we need EU industrial policy to compete with the US and China as well as a rethink of the German (and European business model) of exporting to China and other Asian countries. Europe needs to become more self-reliant and open up exports to other markets more. But this takes years to accomplish.
So, it's not looking good.
And just in from an analysis of Capital Economics about the problem European EV car makers face from Chinese competition:
"More generally, the EU does not have as much fiscal firepower as the US to subsidise its infant EV industry. So with Europe out-gunned by the US and China in the “race” to lead global EV production there is a risk that the European auto industry will gradually lose market share, with negative consequences for trend economic growth in the major auto producers including Germany"
Thank you very much. I believe there will be much to discuss about this in the near future.