Structural Reform on the Goods and Services Markets in Germany

Structural Reform on the Goods and Services Markets in Germany had been started in 2002 to counter the ongoing difficult economic situation. The steps of the reform program is stated below.

1)Entering into a single European Market:
The German government tried to integrate their economy with the single European market to step ahead in the global economy. In the reform period further progress had been made towards that goal. In 2001 the export ratio of Germany was 35% which exceeded the previous year’s figure that was 33.7%. Some important industrial branches increased their export ratio, for example, export ratio of the mechanical engineering sectors was 52%.

Maximum amount, almost 52.5%, of services and goods were imported from Germany only to the European member countries.

2) Opportunity for entrepreneurial initiative:
In 2002, tax and wages had been reduced through the tax reform which improved the condition for entrepreneurial initiative. A new half income system was introduced for the dividend taxation. The firm ownership had been restructured in association with the small and medium scale unincorporated firms.
The reduction of bureaucratic burden had further made the business start up smoother. Through a survey it had been seen that the young people of Germany were more interested to start their own independent business. The comparison of the annual average business start up in Germany for the period of 1995-2000 with respect to the other European Union countries are given below in the table as a percentage of the total number of firms.

Germany Denmark UK Netherlands Spain
16.5% 7% 11% 10% 13.5%

In Germany, the development in the service sectors was taken as a reform step and the private sectors were successfully transformed into a service society. Within the middle of the year 2002, the gross value of the service sectors’ share increased by 0.5% from 2001.

The corporate services flourished a lot, but development in the construction sectors went slowly. The effort to initiate business start ups also helped to develop the service sector.

The share of the female members among the active persons, nearly 54.1%, in terms of gain was very high. With the service sector development this share of the self employed females were also increasing.
4)Enticing the Competition:

To encourage the competitive nature of the market the German government started to reduce the subsidies. So in 2003 the subsidies were reduced by 2.3 billion Euros than that of 2000. The introduction of privatization instilled competition in Germany.
5) Opening the Network Markets:

In 2002, the German government generated a large amount of revenue from the telecommunication services, so more stress is given in the further growth of this sector. Therefore the government took the opening of new network market as a reform step. However, telecommunication service prices decreased a bit, for liberalization in this sector.

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