ABSTRACT
Like Japan, Germany too – to name but one continental European country – is in the midst of a severe structural crisis and has problems in adapting to a changing international economic environment. The world-wide trend towards greater liberalization and globalization seems to favour more liberally structured, market-based economies like the US or the UK and has made it increasingly difficult for socially more constrained economies like Germany or Japan to compete successfully with their liberal counterparts. Although for different reasons and in varying degrees and shapes, in comparison to the US investment in both countries is more patient and employment more long-term orientated. These long-term relationships result to a greater degree of co-operation and mutual trust, and they are shielded against short-term market pressures by political institutions like, for example, more intense and paternalistic regulatory regimes. The paternalistic and cartel-like regulatory system could only function as long as financial markets were closed.
