Drivers of German Economic Development in the Context of the Megatrend of Digitalization

Abstract

Digitalization is one of the key modern drivers of influence on the development of the economies of both individual countries and the world economy as a whole. Accordingly, the megatrend of digitalization determines both opportunities and challenges for national economies with the most significant focus on the largest economies of the countries to which the German economy belongs. The aim of the article is to analyze the features of the complex of actions of the part of the Federal Republic of Germany to support digitalization in the traditional sectors of the economy. The article discusses the features of transformation under the influence of digitalization in the traditional sectors of the German economy, which leads to significant changes in the driving forces of the economic model of the Federal Republic. It is noted that the German economy faces a number of short-term challenges, including the long-term consequences of the COVID-19 pandemic and the Russian-Ukrainian war. In particular, under the influence of exogenous factors, the inflation rate in Germany increased to 7.9% in 2022 from 3.1% in 2021. These crisis challenges have put a certain strain on various sectors of the German economy, creating new challenges for economic development. It is noted that the Federal Government of Germany applies an integrated approach aimed at stimulating both economic development at the short-term stage and long-term growth, based on investments in renewable energy and digitalization. It is emphasized that this balanced approach within the framework of the public policy has contributed to reducing Germany’s dependence on existing exogenous challenges, also to the active emergence of Germany as a leader in the world economic transformation. The key directions of the public policy of digital transformation of Germany are allocated. In addition, the main challenges of digital transformation for the national economy of the Federal Republic of Germany are emphasized. The proposed research can be useful for specialized scientists and analysts, research centers, authorities of both the State and the local levels, and international organizations. The prospects of this study are seen in the analysis of cases of leading national economies on digital transformation and their adaptation in Germany.