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Institutions, Globalisation and Empowerment

Institutions, Globalisation and Empowerment

Edited by Kartik Roy and Jörn Sideras

This book argues that the capacity of a country to develop, and the levels of economic and social development achieved, depend more on the institutional parameters within which the development policies are implemented than on the policies themselves. It contends that forces of globalisation influence individual countries’ economic and social institutions.

Chapter 7: Western Europe: German Unification, Integration, Globalisation – The German Social Market Economy Facing a Threefold Challenge

Michael Wohlgemuth

Subjects: economics and finance, institutional economics, international economics


7. Western Europe: German unification, integration, globalisation – the German social market economy facing a threefold challenge Michael Wohlgemuth INTRODUCTION With the breakdown of the Berlin wall, the creation and extension of a European single market and the ascent of global markets for goods, services, capital and ideas, unified Germany faces a threefold challenge. German unification, European integration and globalisation put the German model of a social market economy to the test as all three processes intensify competitive pressures on Germany’s political and economic institutions. German citizens, entrepreneurs and politicians seem quite aware of the increased opportunities and threats involved in these challenges. But the feeling that the underlying political and economic forces are beyond human control raises more uneasiness than confidence. Unification, integration and globalisation are not widely appreciated as extensions of citizens’ empowerment in their capacity to pursue their private economic choices. Citizens and politicians are more concerned about a reduced empowerment to engage in effective public choices, and to rely on national policies in the face of internationalised political agendas and economic processes. The question ‘who rules?’ may well be, as Karl Popper (1945 and 1950) argued, inadequate for open societies. But citizens do raise it with increasing concern. And the increasing difficulty in finding convincing answers within the realm of domestic policies illustrates changes at different levels of our social life. It becomes more and more obvious that empowerment cannot be sought in the delegated power of political...

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