DP1152 | The Innovation, Unemployment and Competitiveness Challenge in Germany


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The purpose of this paper is to link the twin horns of the European economic dilemma - unemployment and a loss in international competitiveness - to a lack of innovative activity. In Germany the Innovationskrise (innovation crisis) combines with the Standortkrise (location crisis) and the Arbeitslosenkrise (unemployment crisis) to form a triad of economic challenges for the 1990s. This paper documents the extent of this economic dilemma confronting Germany as well as the rest of Western Europe and explains how this dilemma developed in the first place. Finally, policies are recommended that can be implemented to overcome this new economic challenge of the 1990s.