Volkswagen Affair Does Not Reflect A Broader Technological Deficiency in German Industry

Date: 2015-10-10

The Volkswagen affair may reflect either a governance problem within this company, a technological problem concerning only this company – making it unable to meet technical standards – or, which would be serious, a problem with the sophistication or technological level of German industry as a whole.

We therefore seek to ascertain whether German industry may have a problem in its technological level, by examining:

The price elasticity of German exports;
Germany’s export market shares for manufactured products, capital goods and transport equipment;
The prices of German products;
The level of German investment in sophisticated capital and corporate spending on R&D.

Altogether, we find that the technological level of German industry is high.This suggests that the Volkswagen affair does not reflect a broader technological deficiency in German industry

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