DYNAMICS OF INVESTMENT ACTIVITY IN GERMANY AS A REFLECTION OF THE PROBLEMS OF THE NATIONAL ECONOMY

Germany’s economy is undergoing a heterogeneous structural crisis. Its roots are manifold: demographic headwinds from an ageing population, chronic underinvestment by the state, and a gradual erosion of competitiveness in formerly emblematic industrial branches. Taken together, these pressures have stalled growth; German GDP has contracted during each of the past two years. Equally concerning are the adverse trends in Germany’s traditionally pivotal industrial sector, where a crisis has been building since the late 2010s. This confluence of factors is compelling German firms to recalibrate their investment strategies. Some drivers are fundamentally structural, whereas others – most notably the domestic narrative of an energy crisis – encourage capital flight by shaping an agenda propagated by the research and analytical community. Adopting Dunning’s Investment Development Path (IDP) framework, the article interrogates Germany’s evolving stance on investment. The analysis suggests that the parameters of globalisation are themselves in flux. Although the overall degree of liberalisation in the world economy remains high, advanced economies are increasingly curbing the free movement of resources, capital included. In Germany’s case, this «(re)negotiation of globalisation», compounded by structural challenges at home, is destabilising investment flows: the gap between outward and inward foreign direct investment is widening decisively in favour of the former