Despite being a latecomer to Europe’s Industrial Revolution, the German economy quickly caught up to the likes of Great Britain and France; and by 1910 was one of the world’s leaders in industrial development alongside the U.K. and the U.S.
The rapid industrialisation of Germany had been the result of an alliance between industrial business people and the aristocracy who controlled much of the land – emphasising the production of coal and steel, machines and machine tools, chemicals, electronic equipment, ships, and, later, motor vehicles, during the late 19th – early 20th centuries.
Well-organized business, labour, and farm associations also collaborated with the government producing a distinctive “organized capitalism,” different from the less regulated capitalism of Britain and the United States. The strong industrialise base allowed the economy to survive two world wars; and today it remains a global leader in manufacturing and technological innovation.
Unsurprisingly, Germany is Europe's most industrialised nation, boasting major players in industries like automobile manufacturing, machinery, precision equipments, heavy automotive, technology and softwares.
37 of the world's 500 largest stock market listed companies are headquartered in Germany, including Volkswagen, Allianz, E.ON, Daimler, Siemens, Metro, Deutsche Telekom, Munich Re, BASF, and BMW. Other large German companies include: Robert Bosch, ThyssenKrupp, and MAN (diversified industrials); Bayer and Merck (pharmaceuticals); Adidas and Puma (clothing and footwear); Commerzbank and Deutsche Bank (banking and finance); Aldi, Lidl and Edeka (retail); SAP (computer software); Infineon (semiconductors); Henkel (household and personal consumer products); Deutsche Post (logistics); and Hugo Boss (luxury goods).
Germany's Industry Sectors
Comparative to its industry and services sectors, German agriculture is fairly insignificant, contributing only 0.8 percent of the nation's GDP in 2012. Yet, Germany is still ranked third in agricultural production behind France and Italy in the European Union; and the nation is able to provide 90 percent of the population's nutritional needs with its domestic production.
Germany’s agricultural products include potatoes, wheat, barley, sugar beets, fruits, cabbages, cattle, pigs and poultry. Since the 1960s, German agricultural policy has not been decided by the German government, but by the European Commission in Brussels.
Industry in Germany accounts for 28.1 percent of the country's total GDP, and employs 24.6 percent of the workforce. Germany is traditionally strong in industrial products, as prove by its export success in mechanical engineering and automobiles. The country is the world's forth largest producer and the largest exporter of automobiles, which includes world renowned brands like BMW, Mercedes-Benz and Porche.
Germany's industry growth is also driven by many small and medium sized enterprises called Mittlestand. These are family-owned companies with less than 500 employees. Mittlestand in Germany currently has more than 3 million companies, and employs more than 70 percent of the country's workforce.
Services in Germany makes up a large portion of Germany's economy, contributing 71.1 percent of the country's GDP and employing 73.8 percent of the workforce. Germany is renowned for its highly skilled labour force and this ranks Germany third in the provision of services among exporting nations worldwide. It is also ranked first in skill-intensive services like technical services, IT-sevices and financial services.
Although exchange of services contributes to the nation's GDP, many businesses are reluctant to cross borders, mainly due to legal restrictions and working process from the provision of services. As such, the Germany government is working towards removal of these barriers through bilateral agreements in the General Agreement on the Trade in Services (GATS), and through the implementation of the EU services directive.
Read more about Germany's economy, including industry information, featured analysis and trade statistics below.