Merkel refugees STR:AFP:Getty Images

Angela Merkel’s New Germany

From welcoming refugees to improving gender equality, German Chancellor Angela Merkel’s talent at bridging social and political divides has made Germany’s transformation into an open society possible. This, not economic policy, has been the greatest achievement of her tenure.

BERLIN – German Chancellor Angela Merkel’s Christian Democratic Union (CDU) may have won a majority in September’s federal election, but that does not mean that the country’s future is clear. What emerges as Merkel seeks to form a new coalition with the Greens and the Free Democrats will not only shape Germany’s economic trajectory over the next four years; it will also determine the fate of the country’s transformation into a truly open society.

In less than a generation, Germany, once the sick man of Europe, has emerged as a global economic powerhouse. But the truth is that Germany’s current economic success is less the result of good policies than of favorable external conditions, especially in Europe, which ensured strong demand for German exports.

To be sure, important domestic economic reforms enabled Germany to take advantage of external demand. But they were undertaken long before Merkel came to power, and few meaningful economic reforms have been implemented during her 12-year tenure. For example, domestic private investment remains weak, partly owing to overregulated services and heavy bureaucratic burdens.