Germany as an Example of Coordinated Market Economy

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Germany as an Example of Coordinated Market Economy

Table of Contents

Introduction
Example of CME in the German Economy
The German Model
References

Introduction

Note on Comparative Capitalism outlines the opposing concepts of liberal market economies (LMEs) and coordinated market economies (CMEs) which refer to the structures of capitalist systems. LMEs incorporate the focus on competitive markets and the close relationships of their actors (Clayton and Henderson 2015). CMEs, on the other hand, are centered around the idea of actors relationships based on trust, as well as on networks of such components as customers, suppliers, unions, companies, and the government (Clayton and Henderson 2015). Additionally, CMEs, in contrast to LMEs, emphasize coordination between stakeholders and firms (Clayton and Henderson 2015). There are multiple examples of CMEs and LMEs in the worldwide economy.

Example of CME in the German Economy

For instance, Germany is associated with a coordinated market economy. Clayton and Henderson (2015) suggest that this European country is potentially the most prominent example of CME. The German economic model is based on the idea of trust rather than on the principle of an arms-length relationship among its actors (Clayton and Henderson 2015, p. 2). According to Rahner and Schönstein (2018), the German model is an economy where companies are responsive to the needs of their stakeholders and are focused on building long-term relationships between firms and their employees.

Furthermore, the German capitalist system is focused on conducting growth strategies associated with the high quality of its products (Rahner and Schönstein 2018). The close coordination between the countrys stakeholders and firms allows for the successful development of the countrys economy.

The German Model

The specificities of the strategies incorporated in Germanys economy are important in understanding the countrys capitalist model. Rahner and Schönstein (2018) suggest that the idea of the combination of economic and political factors to provide the progressive capitalist strategies is crucial for the German model. The German economy is focused on the quality of its products, as well as negotiations between the systems network (Rahner and Schönstein 2018). Therefore, Germany is centered around the components of a coordinated market economy such as the relationship between companies and clients, both within the country and on an international level.

References

Rahner, Sven, and Schönstein, Michael. 2018. Germany: Rebalancing the Coordinated Market Economy in Times of Disruptive Technologies. Policy Network. Web.

Rose, Clayton S., and Rebecca Henderson. 2015. Note on Comparative Capitalism. Technical Note 315-077. Harvard Business School.

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