There is a growth path for Germany

The German Government has unveiled a series of reforms. However, rather than simply managing the shortfall, it would be better to draw on its imagination and develop a vision for the future. This is demonstrated by the new study from the Foundation for Family Businesses, which sets out five levers for boosting productivity. For every three-person household, these could generate up to 21,000 euros in additional economic output – and thus greater prosperity.

Munich, 17 August 2026. Productivity in Germany has shown no signs of improvement for many years. This refers to the average economic output per person in employment. It has grown by just 0.3 percent per year. The study ‘Five Levers for Greater Productivity’, produced by the IW Cologne on behalf of the Foundation, sets out how to break out of this slump.

A scenario analysis shows that a bold increase in private expenditure on research and development (R&D) would result in a long-term productivity gain of 13 percent. If artificial intelligence (AI) were consistently utilised and rolled out, a gain of around 9 percent could be achieved by 2034. Innovation and AI are the strongest drivers of growth in the long term. In the short term, however, the scenario suggests that bureaucratic reform would have the most dramatic impact: a 1.6 percent increase in productivity after just one year.

The researchers have identified five drivers of productivity and assigned each one a metric that is as accurate as possible and allows for international comparison. In the next step, they simulated Germany catching up with an ambitious international benchmark and linked this to realistic growth impacts, both in the short and long term. There are also five examples from abroad of specific policy measures that could trigger such a boost.

Other countries are leading the way
The drivers are digitalisation, AI, innovation, the regulatory framework and investment. The indicators are the ICT capital stock (for information and communication technology), the proportion of businesses using AI, R&D expenditure, the bureaucracy index and the public capital stock.

At first glance, the effects on growth seem modest, but after just a few years they make a huge difference: depending on the multiplier effect, between 1,000 and 21,000 euros of additional economic output per three-person household (although the five items cannot simply be added together).

Other countries are demonstrating that politics is not powerless. In France, there is a tax exemption for research collaborations. Sweden keeps EU bureaucracy in check through an implementation council. Switzerland focuses on maintaining value and ensuring availability in transport infrastructure rather than on new construction. – According to the researchers, these scenarios illustrate the growth pathways that open up when political decisions and business investment work in tandem.

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