______________________________________________________________ 3.1 INTRODUCTION Germany is Europe’s largest economy and among the five largest ones in the world. According to Benoit and Milne (2006) its industrial production has been growing during the last decade, whereas its share of world exports has been growing since 2000 (Danniger and Joutz 2007). In particular Germany has been the world’s largest exporter (in nominal US$ values) since 2005 although it is expected that in 2008 it will be dethroned by China (given the latter’s higher growth rates). However, getting there has not been trouble free. Following the initial euphoria of the 1989-90 reunification, the German economy started to slow down considerably, and especially since 1993 its GDP growth rates have been consistently below the EU15 average. Recovery from this severe slowdown has been equally slow with occasional relapses (e.g. during 200003). This slow growth had a tremendous negative impact on employment and has been associated with: a) a series of major structural adjustment challenges the country has been facing, b) the difficulties in adapting to the changed environment after the reunification, and c) the last decades’ rapid globalization tendencies (Wurzel 2003; Siegle 2006). Policy experiences with clusters have been amassed since the 1980s, in different German Bundesländer (Land/Länder in singular and plural hereafter) although not uniformly across the country. The term cluster itself is not particularly popular among policy makers due to some early failures that stigmatised it. Thus in recent years the equivalent terms used instead have been those of ‘competence fields’ and/or...
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