for Growth and Employment

BDI Manifesto for Growth and Employment – Germany 2020

for Growth and Employment – Germany 2020

BDI Manifesto

84089_BDI_RoadmapE_Um 09.12.2008 15:41 Uhr Seite 1

BDI – Federation of German IndustriesBDI Manifesto for Growth and Employment – Germany 2020

Preface

Germany is experiencing a tangible period of growth andGerman industry is the primary force behind this newdynamic. Many of our companies and products are thebest in the world, making Germany the world’s leadingexporter. About 1,000 new jobs are created by Germancompanies each day. Growth that had subsided previouslyis now exhibiting new vigour. The improvements thathave been made in the political arena have been a majorcontributor to this positive development. Employees andtheir expertise, hard work and consistently high standardshave helped as well. Once again, we can see what thishighly industrialised country of ours is capable of whenthe conditions are right.

We need to take advantage of this upswing. We cannotallow excessive government consumption expenditure toruin it. We have to use it to create long-term structuralgrowth. We have to take charge of the situation.

This Manifesto for Growth and Employment outlines tenstrategies of the BDI for the next decade. For sustainablegrowth, more jobs and more value-added in Germany.

All of us – the state, the business world and society –need to invest more in education and focus on how wecan compete and assert ourselves in the knowledge econ-omy. So our schools can prepare our children for thefuture. So our top universities can play in the same leaguewith the best universities in the world. We need to domore to turn the results of our research into innovativeproducts and solutions. And we need to use new discov-eries to promote health in particular.

We need to unite economy and ecology, secure reliablesources of energy, protect our climate, use raw materialsefficiently, and expand our communications and transportinfrastructure. We need to play our part in mastering theenormous challenges posed by population growth, urbani-sation and global warming. Germany, with its highlydeveloped industries and technological expertise, has aspecial role to play in finding solutions for sustainabledevelopment.

The state needs to live up to its core responsibilities. Itneeds to cut down on regulations and bureaucracy, and itneeds to use its tax policy and budget policy to bothencourage private investment and make its own invest-ment in the future. It needs to lower taxes and duties toraise the bottom line. We need to fully develop thedynamic of a united Europe, secure the free exchange ofgoods, services and capital, and assert ourselves as impor-tant players on the global market.

We are talking about more than income and profit –much more. We are talking about freedom and responsi-bility. Corporate responsibility in a globalised world. Theresponsibility every individual has to society – and tothemselves. We need a society that stands together. Weneed solidarity and clear ethical foundations. But solidari-ty achieves nothing without action. And we cannot haveaction without freedom. More freedom instead of relyingon the state, more long-term consideration of the futureinstead of short-term political manoeuvres.

We need policies with a solid foundation and a clearfocus on technology and sustainability. We need to set aclear course for the social market economy.

Jürgen R. Thumann

Dr. Werner Schnappauf

1

84089_BDI_RoadmapE 09.12.2008 15:40 Uhr Seite 1



Ten strategies for the coming decade

1. Education to bring about progress .................................................................................................................................................5

2. Advances in technology to create jobs .........................................................................................................................................7

3. Innovations to improve health ..........................................................................................................................................................9

4. Green technologies to promote sustainability...........................................................................................................................11

5. Comprehensive concepts to protect our climate, secure reliable sources of energy and use raw materials efficiently...................................................................................................................................................13

6. Information and communications technology to increase productivity.............................................................................15

7. First-class infrastructure to improve mobility ...........................................................................................................................17

8. Better tax policy and budget policy to encourage investment .............................................................................................19

9. A united Europe to provide vigour ................................................................................................................................................21

10. A global focus to provide growth ..................................................................................................................................................23

3


The future of this country is in the heads and heartsof its children. Our education system should encour-age them to develop a passion for science and tech-nology.



1. Education to bring about progress

Education opens new doors in an individual’s private lifeand career. Education facilitates individual progress andthe progress of the entire country. The state educationsystem, however, is the weak spot in Germany’s innova-tion potential. That is the conclusion of the InnovationIndicator released by BDI and Deutsche TelekomStiftung. One of the greatest strengths of the German edu-cation system is its combination of classroom learningand on-the-job training. And yet each year about ten per-cent of students drop out of school. Millions of people areunemployed but our economy still desperately needsskilled labour. The demographic changes in our countrywill cause the number of working-age people to drop off.This will only make the shortage of skilled labour worse.Germany must invest more in knowledge and quickly actto liberalise and deregulate if it is going to take fulladvantage of the potential of the knowledge economy.

• The government must invest more money in education– at least as much as the OECD average. The primaryand secondary education sectors are in particularly direneed of funds.

• We must promote independent private funding for edu-cation in the same way that other countries have done.

We can make this easier by utilising the loan modelsthat banks use for non-corporate customers.

• We must give schools, colleges and universities moreautonomy so they can be more flexible to adapt to theneeds of businesses and society. They need a greaterdegree of economic and legal independence. We shouldoffer better pay to teachers of maths, IT, the natural sci-ences and technology. More than anything else, our uni-versities need to be free to make their own decisionsabout staffing, salaries, pricing and investments. Thiswould also make it easier for them to share andexchange employees with businesses. Individual univer-sities need to sharpen their profiles. As universities com-pete with one another, some of them will rise to the topand join the ranks of the best universities in the world.

• This degree of autonomy will only come about if theMinistry of Education steps back and lets competitiontake control. It follows that a major portion of publicfunds should also be spent to promote competition. Oneflexible way to reroute public funds is for universities toprovide students with education vouchers. Universitiesmust also be free to set their own tuition fees. Institu-tional funding must be diverted so that 60 percent goesto fund research programmes and research projects.

Knowledge forms people. It gives them a reference point – learning about thepast helps them understand the present and shape the future. Knowledge isour country’s most important resource. Germany needs to cultivate the talentsof each and every one of its inhabitants, encouraging creativity, competitionand extremely gifted individuals – and it must invest more in education.

5

Source: OECD, Education at a Glance 2007

Number of graduates in maths, IT, the natural sciences and technology per 1,000 workers in 2003

Irelan

d

Fran

ce UK

Sweden

Spain

Portu

gal

Japan Ita

lyUSA

Norway

Denm

ark

Belgium

Nethe

rland

s

Germ

any

1

0

2

3

4

5 »Germany must cultivate thetalents of its inhabitants, invest

more in knowledge and encouragecreativity and competition if it is totake full advantage of the potentialof the knowledge economy.«Dr. Arend Oetker, Managing Partnerof the Dr. Arend Oetker HoldingGmbH & Co. KG and Vice Presidentof the BDI


Technological innovation is the key to overcoming themajor challenges of the future. German researchersand their colleagues from around the world are lead-ing the way to new technological discoveries in basicresearch as well.



2. Advances in technology to create jobs

Germany is a home for industry. One of its greateststrengths is its exports. Supported by a diversified structureand an impressive stock of high-performing medium-sizedbusinesses, the industrial sector generates more value-added per capita than any other branch of the economy.Intelligent technology, innovation, ideas and the protec-tion of intellectual property form the basis of our highstandard of living. The federal government must help sus-tain this by gearing its high-tech strategy toward achievingreal results in areas where there is untapped potential. Thestrategy that the federal government has recentlyembarked upon represented an impressive new approach.The crucial thing now is to develop the strategy furtherand create conditions that will result in the greatest possi-ble increase in value. One way to achieve this is by strate-gically allocating funds to specific technology sectors.Many suggestions on how to do this can be foundthroughout this manifesto. Promoting research will involvemore than just doing more research, it will mean stabilis-ing and further developing the sources of value that wealready have.

• We must invest more in research and development(R&D). Germany must meet the European Union’s tar-

get by spending three percent of its GDP on R&D. Thestate needs to spend its research budget more effective-ly and allocate more money to projects, rather than toinstitutions.

• We must introduce tax incentives to encourage research.Companies should be able to deduct at least ten percentof what they spend on R&D from their tax liability. Taxincentives to encourage research must be designed tostand the test of time while also being reliable and non-bureaucratic. More than anyone else, small and medi-um-sized enterprises stand to benefit from this methodof promoting research and development.

• This instrument must exist in addition to project fund-ing. Depending on the technology in question, thecompetitive position in the global market and researchintensity, the right mix of project funding and taxincentives to promote research will be crucial instrengthening Germany’s competitive position. Regard-less of the industry involved, whether raw materials,production technology, pharmaceuticals, biotech, nano -tech, IT or communications technology – the importantthing is to consolidate Germany’s technological lead.

• We must better protect our intellectual property. Ger-man industry in particular would benefit greatly froman efficient European patent system. A Europeanagreement for settling disputes would reduce the risk oflegal costs, and aligning international patent systemswith the US system in particular would increase legalcertainty.

Innovation attracts business. The manufacturing industry is the driving forceof innovation, setting the pace of technology for the nation’s entire economy.Research and development decide whether a product and a country will suc-ceed against the competition.

7

Direct funding for R&D and tax incentives to promote R&D

Government sponsorship of R&D in relation to the amount spent on R&D by companies, expressed as a percentage of the amount spent on R&D by companies

Source: Federal Ministry of Education and Research, 2008

UK(2004)

Canada (2004)

Norway (2004)

France (2002)

Netherlands (2005)

USA (2001)

Australia (2004)

Japan (2003)

Germany(2004)

Finland (2004)

0 % 5 % 10 % 15 % 20 %

Project funding Tax incentives

Austria (2005)

»Developing and protectingnew technologies and selling

them to the world are the foundationof our prosperity.«Friedhelm Loh, Owner and Chairmanof the Board of the Friedhelm LohGroup, Vice President of the BDI


Advances in medicine increase our chances of living along and healthy life. For that we need different gen-erations to work together harmoniously – and ahealthy dose of personal responsibility.



3. Innovations to improve health

More freedom and competition is needed in the health-care sector. Granted, the pharmaceuticals industry is oneof the most research-intensive industries in our countryand we rank number two in biotech production world-wide, with a high percentage of exports, and Germany hasalso developed into a leader for medical and dental tech-nology, yet the maze of regulations at federal level isthreatening to choke this thriving sector. This endangersGermany as a location for research and development,production and growth. A market-driven healthcare sys-tem with socialist shock absorbers promotes innovationand brings the fruits of this innovation quickly to patients.

• We must strengthen research. Methods of diagnosisand therapy need to be improved dramatically toensure that people remain healthy and strong even inold age. For this to happen, we need excellent basicresearch and excellent conditions for companies doingresearch.

• We must pursue innovation strategies together. Scien-tists and businesspeople should design the country’shigh-tech strategy together. This means that committeesand panels of experts working on programmes forhealthcare research need to include a balanced mix ofpeople from both groups. Strategic collaborations alsoshape the future of the medical industry.

• We must optimise how university clinics and clinicalresearch interact. We need to strengthen the independ-ent research centres that are funded by third partiesand associated with universities. This will help Ger-many maintain a leading position in clinical researchand can help keep its best and brightest from emigrat-ing. Businesses need to work closely with the clinicalresearch centres associated with universities and theskill networks of university clinics. Legal uncertaintiesmust be eliminated.

• We must organise competitive insurance systems.Health insurance contributions need to be separatefrom labour costs; healthcare costs must no longer beallowed to weigh down the labour market. The right tocompete must apply to all involved.

• We must tackle every serious illness with adequatetreatment. For this to happen, there must be adequatefunds available. People also need to be encouraged totake responsibility for themselves, by dropping habitsthat pose a risk to their health and getting treatmentearly on. In a society based on solidarity, people willalso need to make larger financial contributions totheir own healthcare, and the range of paymentoptions must be extended. Solidarity works best whenpeople are willing to take responsibility for themselves.

The most important issues in the healthcare sector are research sponsorshipand especially the wider political and economic context. The healthcare sec-tor is too heavily regulated. That needs to change − the sector needs tobecome less centralised, there needs to be more competition among healthinsurance providers, more innovative services and more transparency forpatients.

9

»The maze of regulations at federal level threatens to

choke the thriving healthcare sector.This endangers research and devel-opment, production, growth and jobsin Germany.«Prof. Ulrich Lehner, Member of theShareholders’ Committee of HenkelAG & Co. KGaA and Vice Presidentof the BDI


Climate change makes us more aware of just how sen-sitive nature is. German industries are using advancedtechnology to bring together climate protection andeconomic growth in places all around the world, help-ing secure the foundations for life.



4. Green technologies to promote sustainability

The sometimes devastating effect rapid economic growthcan have on the environment has raised environmentalawareness across the world. It is essential to implementeffective green policies quickly if we are to protect theplanet. In 2005, approximately 745 million people lived incountries with long or short-term water shortages. It ispredicted that this number will increase fivefold by 2025.This presents a massive need for investment. For example,it is estimated that China must invest twelve percent of itsGDP in environmental protection measures. Incorporat-ing green technologies across a range of conventionalindustrial production methods by 2020 could be animportant means of creating value within the Germaneconomy.

• We must cooperate to decide on joint ecological objec-tives; a solution acceptable to all can only be found ifpolitics, industry and society work together to developenvironmental regulations. Clear ecological regulationsare a key factor in giving companies planning security;the economical dimension cannot be ignored.

• We must boost research, development and the imple-mentation of innovative technologies. State funding forresearch must prioritise projects according to the mar-ketability of the products they result in. The mostdynamic research fields are currently life-science tech-nologies, in particular white biotechnology, and nano -technology. The funding of highly efficient green tech-nologies must also be better coordinated by the Ger-man government and the European Commission.

• We must support promising pilot projects. State pro-curement policies and intelligent market launchapproaches that make good economic sense can helpto propagate innovations. One example is the »CarbonCapture and Storage« pilot project. The export of Ger-man green technology must be heavily and systemati-cally promoted.

• New green legislation (the Umweltgesetzbuch or UGB)must not be allowed to hinder innovation. The Germangovernment intends the UGB to strengthen Germanindustry’s competitiveness and its ability to innovate.Yet in order to achieve this, businesses must have onething above all else: the security to implement theirplans quickly and effectively. The UGB must thereforenot provoke uncertainty about the approval of industri-al facilities. Otherwise the government will fail toachieve its goal.

Clean air, pure water and fertile soil – modern technology is making it possi-ble to protect the environment while still promoting economic growth. Ger-man industry has taken a leading role in the markets for advanced greentechnologies and is therefore playing an important part in securing basic liv-ing standards and health for millions of people.

11

»We must cooperate in orderto realise our ecological object -

ives. An acceptable solution to allcan only be found if politics, industryand society work together to developenvironmental regulations.«Dr. Dieter Brucklacher, the entrepre-neur behind Leitz Holding GmbH &Co. KG and Vice President of the BDI


Renewable energies like solar, wind, geothermal, bio-mass and hydroelectric power and fuels such ashydrogen are the energy sources of the future. Theywill lead the way in the transition from a carbon-based economy to a low-carbon economy and ensurethat the balance between economy and ecology ismaintained.



5. Comprehensive concepts to protect our climate, secure reliablesources of energy and use raw materials efficiently

The global need for energy is increasing dramatically andthe hunger for energy in emerging economies is causing asharp rise in carbon emissions. Germany has markedlyreduced its CO2 emissions and the lion’s share of thesereductions has been borne by industry. This trend cannotsimply be extended into the future, however. The energysupply must be stable and reliable, and it must fulfil envi-ronmental, economic and social criteria. We cannotassume an infinite supply of resources, and must thereforeuse those that are available to us as efficiently as possible.This necessitates improvements to the framework condi-tions on national and international markets. An effectivepolicy requires a consistent approach:

• We must pursue an integrated energy concept that isdefined by efficiency and a balanced mix of differentenergy sources, incorporating fossil fuels, renewableenergies and nuclear power. Renewable energies haveto play an important role in supplying Europe withenergy and reducing its CO2 emissions. They must becompetitive and able to assert themselves on the mar-ket without additional funding in the medium term.

• We must exert the right pressure to reduce emissions inGermany. If all the available technological levers asidentified in our climate study (BDI/McKinsey) areimplemented, by 2020 Germany could achieve a 30-percent reduction in greenhouse-gas emissions over1990 levels without harming growth.

• We must approve the use of low-emission coal-firedpower stations during the next three to five years. Theaim is to reach market maturity by 2020. Funding willbe necessary to kick-start investment in demonstrationplants in Europe.

• The development of nuclear reactors should beginagain immediately to further improve nuclear safety,otherwise the country risks losing the skills and exportopportunities associated with this sector.

• Electricity networks must be more intelligently struc-tured. The electricity-supply infrastructure in Germany

and Europe in general is not capable of meeting futuredemand. Germany must create incentives for invest-ment in innovative technologies.

• We must use energy more intelligently. Germany can-not do without energy, but it can further reduce con-sumption by encouraging the targeted use of intelligenttechnologies, in the electrical engineering sector, forexample. The government could also stimulate themarket penetration of these technologies.

• We must ensure a secure supply of resources by creat-ing open markets for raw materials and ensuring faircompetition. Trade policy should counter existingtrade-distorting practices – in particular the large num-ber of trade barriers – and ensure fair competition onthe raw-materials markets.

• We must secure access to domestic raw-materialdeposits. German industry must be guaranteed theright to use raw materials deposits in Germany.

• All government departments must work together totackle the challenge of securing raw material supplies.Foreign, export, trade, competition, development, envi-ronmental and research policy must be incorporated.

Combining climate protection and economic growth is one of the greatestchallenges facing humankind this century. The intelligent use of energies andresources is essential if we want to achieve sustainable growth. With its greattechnical expertise, German industry offers solutions that could allow us tobecome a low-carbon society.

13

»Germany needs an integratedenergy concept; this must be

characterised by efficiency andinclude a balanced mix of all the different energy types. We must pro-tect our climate, but measures mustbe economically viable.«Dr. Wulf H. Bernotat, CEO of E.ONAG and Member of the PresidentialBoard of BDI


Modern telecommunications structures provide newperspectives for the entrepreneurial spirit. Every areaof Germany needs broadband internet access. Theeffect will be the same as when the first rail and roadnetworks were established. Information and commu-nications technology are among the most importantdrivers of future growth.



6. Information and communications technology to increaseproductivity

Information superhighways are affecting the pace of ourworld. ICT drives innovation and growth in the industrialand service sector. It forms a foundation for the achieve-ments of every industrial nation. ICT is everywhere intoday’s world, from mobile phones to MP3 players toanti-lock braking systems in cars. Since the mid-1990s,the ICT industry has grown much faster in Germany thanin most other countries. And yet this country invests lessin information and communications technology thanother leading industrialised countries, especially the Unit-ed States. We must promote ICT and ICT implementationto better exploit its potential.

• We must create broadband data transfer capabilitiesacross the entire country. We need planning reliabilityand clear incentives for investors in order to strengthenprivately financed expansion. We also need to be able toutilise radio frequencies as soon as they become availablein order to provide broadband access to people who livefar away from conventional broadband networks.

• We must focus research on technologies with highgrowth potential. The aim of research and innovationpolicy must be to further develop ICT and use it in avariety of different applications. Sponsorship shouldfocus on selected areas.

• Getting people used to using information technologybegins in schools. Intelligent use of IT must be asimportant as reading and writing.

• We must integrate isolated applications in e-govern-ment. We need to find an answer to the question ofhow to create interoperability among the many thou-sands of isolated applications already provided by indi-vidual administrative bodies. This is the only way e-government can succeed, particularly in the task ofawarding contracts.

• We must use advances in technology to optimise medicalcare. An important first step for innovative e-health solu-tions is to introduce an electronic health card. It will beimportant to ensure that all stakeholders accept it.

• We must push the use of ICT in the energy sector. Sup-pliers can then adjust their prices depending on time ofday to reduce the risk of spikes and use power plantsmore efficiently.

• We must establish RFID standards and provide fre-quencies to build on the strong position of GermanRFID users and technology providers. Flagship initia-tives will be particularly important.

Information and communications technology (ICT) is absolutely essential toeconomic and social development in the 21st century. More than one third ofall advances in productivity in Germany are due to ICT applications. Yet weare only scratching the surface of ICT; we must uncover its full potential.

15

Source: BITKOM / EITO (www.eito.com)

Average annual growth of ICT markets from 2005 to 2009 (in %)

Germany

Europe (notincluding Germany)

USA

Japan

Rest of world

World

4.8

2.3

5.8

0 2 4 6 8 10 12

2.0

3.5

10.4

»More than one third of alladvances in productivity in

Germany are due to information andcommunications technology applica-tions. Yet we are only scratching thesurface of ICT; we must uncover itsfull potential.«Prof. August-Wilhelm Scheer, Chair-man of the Supervisory Board of IDSScheer AG and Vice President of theBDI


Mobility gives export champion Germany a key com-petitive advantage – whether on land, on the water orin the sky. Investments in transport infrastructure willbenefit generations to come.



7. First-class infrastructure to improve mobility

When we invest in transport infrastructure we are invest-ing for the sake of future generations as well. After all,failing to perform maintenance and repair work leads todamage that takes a long time to fix. The transport infra-structure is the main artery of the economy. No leadingindustrial nation can afford to make compromises in thisarea – especially not Germany, with its place at the heartof Europe. Yet Germany is only subsisting in this area.Anyone who drives has known that for a while now!When we neglect our transport infrastructure, we throwaway opportunities for growth and jobs. The transportand logistics sector employs about 2.6 million people inthis country. That is eight percent of the entire labourforce. Furthermore, Germany spends over 200 billioneuro on logistics services each year. Tomorrow’s mobilityneeds to be a political priority today.

• We must ensure that the transport infrastructure isready for the future. Germany needs to invest appropri-ately to meet its transport infrastructure needs. Cur-rently, the government is not even adhering to theannual sum of 10 billion euro earmarked by its FederalTransport Infrastructure Plan. By 2020 at least 30 bil-lion euro more will need to be invested in the country’stransport infrastructure than is currently planned for.

• Money obtained from truck tolls should be used asadditional funding for the transport budget. It shouldgo straight to the VIFG (Verkehrsinfrastrukturfi-nanzierungsgesellschaft). Public-private partnershipsare an essential part of good transport policy.

• We must bring more competition to the rails. We needto boost our rail network to make it a more attractivetransport option by investing to meet current andfuture needs and introducing incentive structures thatwill encourage healthy competition.

• We must expand airports and reform airspace manage-ment. We need to eliminate bottlenecks in the air andon the ground. We need to act quickly to implementstandards for air traffic control in the EU airspace.Subsidising airlines and airports distorts competition;this practice needs to be eliminated to make climateprotection measures more effective.

• We must strengthen the maritime transport chain. Har-bours continue to be our gates to the world. Rapidtrade expansion, however, has pushed many transferterminals to their limits. We urgently need to updateour land and sea access points to meet currentdemands.

• We must improve efficiency with IT technologies. ITenables more intelligent transport management byfacilitating the flow of information, optimising logistics,increasing security and reliability and reducing CO2

emissions.

Mobility creates prosperity and jobs for Germany. It is an expression of ourquality of life. We need a first-rate infrastructure to ensure mobility andsmooth logistics. We cannot allow opportunities for growth to get stuck inbottlenecks.

17

Source: Federal Ministry of Transport, Building and Urban Affairs, 2007, Pro Mobilität 2007

Motorway investments stagnate – despite HGV toll revenues

In billions of

6.00

5.00

4.00

3.00

2.00

1.00

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

From the budget From truck tolls

»We need a forward-lookingtransport policy that proactive-

ly eliminates jams and builds on thestrengths of every mode of transport.«Matthias Wissmann, President of theVDA and Vice President of the BDI


Higher taxes and duties have recently had a negativeeffect on consumer spending. Economic growth mustreach average people while also improving their bottom line. Then they will have greater spendingpower and more faith in the social market economy.



8. Better tax policy and budget policy to encourage investment

Businesses and people alike need a competitive tax envi-ronment. Working middle-class people need more spend-ing power, for one. The government must lower taxes toincrease the bottom line. Then it will pay to work hardand there will be wider acceptance of the market econo-my. The 2008 corporate tax reforms may have broughtmajor changes to the country’s tax environment, and low-ering the corporate tax rate from 25 to 15 percent consti-tutes an important signal for tax policy, but Germany stillranks among the top third of countries in terms of taxrates. Excessive taxable base definitions and taxation ofcross-border transfers of functions within a multinationalgroup endanger our prosperity. Our country needs a com-petitive, efficient tax and finance policy.

• We must reduce the government’s public spending to35 percent of the gross national product to encouragegrowth.

• We must reduce the actual tax load of companies. Theinteraction of taxable base and tax rate plays an impor-tant role in making investment decisions. Corporatetaxation must be able to compete internationally.

• We must simplify tax laws. Germany needs a depend-able tax policy with a high degree of planning reliabili-ty. We should never use EU regulations as excuses forshort-term measures motivated by budget policy. Thetax system has sadly become famous for its maze ofclauses and sub-clauses. We will need to change that ifwe want to win back investor trust. Making suddenchanges to tax laws reduces confidence. Particularly inthe area of value added tax, we need to do away withred tape and at the same time prevent fraud.

• Taxation should not depend on an entity’s legal formor its source of funding. Tax law should not restrictentities in their choice of a legal form. We should nottax the profit of one type of company in one way andthe profit of another type in another way. That shouldapply regardless of whether the company is a sole pro-prietorship or a corporation.

• Trade tax must be phased out. Trade tax needs to beintegrated into the system of income tax and corporatetax. Tax revenue volume, however, should remain sta-ble to provide funds for local government.

• We must protect the future of medium-sized enterpris-es. The estate tax places a burden on family-ownedbusinesses when the next generation takes over. It isparticularly important to look after medium-sizedenterprises. The inheritance tax reform points in theright general direction. But the devil is in the details.Whether the reform will truly bring about positivechange will depend on how it is implemented in thereal world.

The state needs to reduce its spending and its involvement in private busi-ness. A more modest federal government will mean more freedom, initiativeand growth. The result will be more freedom for fiscal policy to implementcompetitive taxation and greater investment in education, research and infra-structures.

19

»The interaction of taxable baseand tax rate plays an impor-

tant role when making investmentdecisions. Corporate taxation mustbe able to compete internationally.«Dr. Ekkehard D. Schulz, Chairmanof the Board of ThyssenKrupp AGand Vice President of the BDI


The single European market has been a great successstory. We want that to continue so that Europe canbecome the most innovative, most dynamic economicarea in the world. The secret to success is simple −free cross-border movement of people, goods, servicesand capital.



9. A united Europe to provide vigour

The single European market has been a great successstory. The secret to its success is simple − free cross-bor-der movement of people, goods, services and capital. Yetthe EU is not fully exploiting its economic opportunities.One area of concern is its failure to be as productive asthe United States. Although the EU finally made progressin this area in 2006, it had been losing more and moreground to the US during the ten years prior to that. It istime for Europe to move forward.

• We must bring the Lisbon Strategy to fruition. The goalof making Europe the world’s most dynamic knowl-edge-based economic area by 2010 is out of reach.Europe can, however, make that goal a reality by 2020.Both the EU and its member states have a responsibili-ty to more effectively implement the new cycle of theLisbon Strategy launched in March 2008. »Gold plat-ing« of EU directives at national level is counterpro-ductive.

• We must develop the right industrial policies. Businessexperts contribute ideas that will make European poli-cy a boon to industry, which is, after all, the motor ofthe European economy. Such expertise can be found inbodies like the High Level Group on Competitiveness,Energy and the Environment and in sectoral initiatives.The goal must be to work together to recognise the

potential of European industries and identify the barriers to the full utilisation of that potential.

• We must liberalise our markets. Liberalising infrastruc-ture markets, services and labour markets will be a keystep to unlocking the full potential of the single market.

• We must modernise EU finances. These are already setuntil 2013, but after that time the EU must readjust itsfinances to equip itself for the future. This will involveinvesting more in research, development and innova-tion while also introducing greater transparency anddistributing financial burdens more fairly. A Europeantax is unnecessary and inappropriate.

• We must carry out institutional reforms. The LisbonTreaty modernises European institutions, streamlinesdecision mechanisms and will be able to strengthenthe principle of subsidiarity. What Europe needs to donow is to implement the treaty as soon as possible.Competitiveness must be a top priority.

Shared values are what unite Europe. Europe stands for peace, freedom andsocial equality. Europe’s economic value is another unifying factor. The Euro-pean Union brings economic prosperity. In comparison to the United States,however, Europe is still far behind.

21

Boosting potential

Competitiveness

Open markets worldwide

Strong infrastructure

Focused EU funding

Politicalcapacity

Better regulation

Functioningsingle market »Liberalising infrastructure

markets, services and labourmarkets will be a key step to unlock-ing the full potential of the internalmarket.«Prof. Hans-Peter Keitel, Member ofthe Supervisory Board ofHOCHTIEF AG and Vice Presidentof the BDI


Between 1995 and 2005, around 2.5 million jobs werecreated in Germany as a direct result of globalisation.We need to take advantage of the opportunitiesoffered by globalisation without losing sight of perti-nent ecological and social concerns.



10. A global focus to provide growth

Germany is benefiting from globalisation. In the past tenyears, German exports have doubled. Nearly half of allbusiness revenue comes from abroad. Germany’s medium-sized enterprises are very successful on the global market-place as well – for example, they lead the world market in21 of 31 mechanical engineering subsectors. Since 2000,Germany has managed to increase its share of the worldmarket despite the dramatic rise of China. To twelve per-cent. This protects millions of jobs. All of this illustratesour country’s need for more liberalisation and greaterinvestment freedom.

• We must push forward the opening up of markets. Thefirst priority should be to successfully conclude theongoing WTO negotiations. Legislators need to removetrade restrictions and improve access to internationalmarkets. German industries have great expectations ofthe Doha Round. At the same time, the EU must sys-tematically strengthen its relationships to strategicallyimportant countries. Areas of the world that requireour attention include Asia, the United States, Russiaand Mercosur.

• We must protect investment freedom. Open marketsare crucial for cross-border investment. More supportneeds to be given to the OECD’s efforts to establish

basic international principles for this type of invest-ment. The IMF needs to deal with the lack of trans-parency and with the limited accountability of sover-eign wealth funds. And Germany’s federal governmentis strongly urged to refrain from interfering unnecessar-ily in issues of investment freedom.

• We must provide more economic and political assis-tance to support business opportunities abroad. Weshould give special attention to improving opportuni-ties for Germany’s medium-sized enterprises by helpingthem to enter new markets and resolving problemsabroad. This will require close coordination betweenthe federal government and German industries.

• We must improve cooperation between industry anddevelopment agencies. This can create synergies thatbenefit developing countries and businesses alike.

• Multilateral processes must be invigorated. Reforms areneeded to improve the effectiveness of internationalorganisations.

• Greater integration of the transatlantic economic areacan increase economic growth on both sides of theAtlantic by more than three percent. The long-termplan outlined by the Transatlantic Economic Council(TEC) is a good start.

Freedom, openness and international goodwill are basic values that also aideconomic growth. The global exchange of goods, services and capital bringsgreater material prosperity. This is especially true for Germany, the world’sexport champion.

23

*Gross value-added generated during production for export and domestically on upstream production stages (including net taxes on purchased materials and services)

Chemical products Vehicles and vehicle parts

Machines Other goods

Source: Federal Statistical Office

1995 2000 2006

Percentage of gross domestic product derived from export-based gross value-added*

0

3

6

9

12

2

3,32,5 2,4

6,8

2,12,8

10,8

8,4

2,4

3,74,3

»Germany is benefiting fromglobalisation. In the past ten

years, German exports have doubled.That protects millions of jobs in ourcountry.«Dr. Jürgen Hambrecht, Chairmanof the Board of Executive Directorsat BASF SE and Chairman of theAsia-Pacific Committee of GermanBusiness (APA)


Imprint

BDI publication No. 412EISSN 0407-8977

EditorBDI – Federation of German Industries (BDI)Breite Straße 2910178 Berlin, GermanyTel.: +49 30 2028-0www.bdi.eu

PublisherIndustrie-Förderung GmbH, Berlin

Graphics and layoutConcept: Factor DesignRealisation: DCM – Druck Center Meckenheim

Printed byDCM – Druck Center Meckenheim

PhotosD. Schneider – adpic.de (page 20)Hans-Günther Kaufmann (other photos)

DateJune 2008

The long version (German language only) of the BDI’sManifesto for Growth and Employment – Germany 2020can be found at our website www.bdi.eu.

24 BDI – Federation of German IndustriesBDI Manifesto for Growth and Employment – Germany 2020


BDI Manifesto for Growth and Employment – Germany 2020

for Growth and Employment – Germany 2020

BDI Manifesto

84089_BDI_RoadmapE_Um 09.12.2008 15:41 Uhr Seite 1

Documents

for Growth and Employment