05 January 2012

Innovation and Unemployment in Germany and the US

The graph above (data from the World Bank) shows manufacturing as a proportion of GDP for Germany and the US from 1985 to 2008 (2009 for Germany) showing in both cases a decrease of about 35%.

Now let's look at unemployment in the US and Germany from 2000 to present (data from the IMF).

Over this period, Germany's unemployment has decreased while that in the US increased by almost 100%.

This data alone should be enough to reject the hypothesis that technological innovation in manufacturing is a primary cause of current economic woes in the United States.