Germany more crisis-proof than other economic nations

Chancellor Olaf Scholz

According to a study, there is a “pronounced climate of trust” in the state, economy and society in Germany.

(Photo: Reuters)

Dusseldorf, Berlin In the competition between systems, democracies have proven to be significantly more crisis-proof than autocracies. In particular, social market economies like Germany are better able to deal with economic shocks than countries like China or Russia.

This is the result of a study by the Roman Herzog Institute, which is close to employers, on behalf of the Bavarian Business Association (vbw), which is available to the Handelsblatt.

In their study, the authors of the study led by economist Michael Hüther, head of the German Economic Institute, compare Germany’s ability to withstand crises with that of other countries. For this purpose, the team of authors has compiled various studies and combined them to form an overall picture.

According to this, Germany is in sixth place out of 24 countries in an overall ranking of crisis resilience. According to the study, Norway can react most flexibly to crises such as a pandemic, followed by Finland, Sweden, Switzerland and Denmark. At the far end of the ranking, China and Russia are in 23rd and 24th place.

What is striking here is that the performance in individual rankings such as social cohesion or trust in state institutions is almost always the same as the overall ranking. Scandinavian countries with their well-developed welfare states are ahead of continental market economies such as Germany or France, followed by Anglo-Saxon countries such as Great Britain or the USA. Then come the southern European countries, followed by the post-socialist states like Hungary, which are catching up, and autocratic regimes.

Germany able to act in crises thanks to low debt

After the many crises in recent years, the “resilience” of states has become a central object of study in economics.

In analyzes of which economic system is the more flexible, a distinction is made between resilience and robustness. Authoritarian regimes are quite robust: they can suppress criticism and thus remain stable. However, an overthrown dictatorship rarely makes a comeback. “Democracies, on the other hand, are resilient. Although they are volatile, they can integrate criticism and process shocks internally,” says Randolf Rodenstock, CEO of the Roman Herzog Institute.


For example, thanks to its low level of debt, Germany is very capable of taking action in crises. This became evident during the pandemic and shortly after the outbreak of the Ukraine war, when Germany launched such large rescue packages that it even drew criticism abroad.

According to the study, Germany can also score points when it comes to sustainability. The Federal Republic is in the top group worldwide when it comes to the expansion of renewable energies and has managed to decouple economic growth from CO2 emissions since 1990. Of the major industrial nations, Germany also achieves the most sustainability goals of the United Nations.

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It would also be comparatively fair in Germany. “Contrary to popular belief”, income inequality has not increased recently; on the contrary, equal opportunities have recently improved, write the authors of the study.

Federal Republic is “high employment country”

In addition, a particularly large number of citizens in Germany have good jobs. “The high-wage country has also become a high-employment country,” says the study. This is one of the reasons why there was “a pronounced climate of trust” in the state, economy and society in Germany and in the Scandinavian countries both before and after the corona crisis. And this trust is central so that states can react flexibly to crises. “German society and the economy are also proving to be well prepared for future crises,” states Rodenstock.

>> Read here: How much prosperity the crisis is costing Germany

However, the study also calls for a number of improvements. Germany’s economic momentum has recently been weak. “We see a need for reform, for example, in adapting the pension formula to the changed demographics and in the technology-neutral expansion of renewable energies,” says Rodenstock. The rapid realization of LNG terminals shows “how important de-bureaucratization is for quick problem solving and thus also for the resilience of a state in the long term”.

LNG Terminal Wilhelmshaven

Germany has significantly expanded its LNG infrastructure since the start of the Ukraine war.

(Photo: dpa)

In order to become more resilient, the study authors believe that in addition to reducing bureaucracy, an “investment agenda” is also needed in order to achieve the conversion to a socio-ecological market economy.

The authors around Hüther make people sit up and take notice with their financing proposal in particular: An investment agenda must also be financed via “public credits” so that one generation is not burdened excessively. “If a generation has to do a lot, then this will not be possible from the tax budget alone.”

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