On May 20, it was reported on the reference news website that the website of the German newspaper Le Monde recently published an article entitled "Germany with low productivity - now a large number of zombie enterprises cause bad consequences". The author is Frank Stoker, and the content is compiled as follows:

Labor can generate income, but if you want to bring economic prosperity, you need something else: increasing productivity. Only when employees, enterprises and the national economy become more and more efficient can living standards be improved. However, in the past 20 years, Germany and even Europe have hardly made any progress in productivity.

Therefore, Deutsche Bundesbank entrusted its economists to study the relevant reasons and how to reverse this trend. As usual, there are more than one reason, but complex and diverse.

The financial crisis, the debt crisis and the zero interest rate policy implemented for many years may be part of the reason. Population structure is clearly another factor - and it could lead to this stagnation for many years. Deutsche Bundesbank believes that only rapid and effective structural reform can help.

In the 1970s, the productivity growth rate of major European countries remained between 2% and 4% per year, but after that, it continued to decline, almost always below 1% in the past 20 years.

During this period, the efficiency gap between enterprises has also been widening. In other words, there are both high efficiency companies and low efficiency companies.

But the problem is that under normal market economy conditions, companies with low efficiency should be squeezed out of the market by new companies with higher efficiency. The labor force will also be transferred from the failed enterprise to the new enterprise, and strengthen the strength of the latter. Economists at Deutsche Bundesbank said: "Therefore, the entry and exit of enterprises from the market is crucial to improving the overall economic productivity."

However, over the years, the number of bankrupt enterprises has become less and less. From 2004 to 2023, the number of bankrupt enterprises in Germany will decline by 55%, and the number of closed enterprises will also decline by 30%. Of course, the public generally believes that this is a positive phenomenon. But conversely, this also means that fewer and fewer new companies are more productive.

From 2004 to 2014, the total number of registered companies in Germany decreased by 30% to about 86000. Despite the economic boom from 2014 to 2019, this number has remained at this level.

As a result, the economy is becoming less and less dynamic, sometimes even falling into a rigid state. This has also resulted in almost no increase in productivity and almost no increase in wealth. Why? There are both economic and structural reasons.

Economists at the Federal Bank of Germany believe that the economic reasons include the turmoil caused by the financial crisis and the subsequent European sovereign debt crisis. These crises have triggered uncertainty, leading to a reduction in the number of start-ups. At the same time, government support measures often help enterprises avoid bankruptcy.

Economists believe that the low interest rate policy of central banks is an important structural reason. Various empirical studies have shown that the expansionary monetary policy that the euro area has adhered to for a long time may have a negative impact on the vitality of enterprises.

Economists wrote: "Micro data from 12 EU countries, including Germany, France, Italy and Spain, show that due to the monetary policy orientation after the global financial and economic crisis, the proportion of unprofitable companies with access to favorable financing conditions has increased."

Economists said that there are also signs that it is also critical that the market entry rate and delisting rate of enterprises are low. "This finding can explain why the enterprises in the euro area are still lack of vitality at the stage of low interest rates despite the large-scale economic recovery."

The statement of the Federal Bank of Germany is very cautious, but economists have long used the keyword of "zombie" in their discussions: companies that have long been unable to pay under normal conditions survive because of low interest rates, and like zombies, they haunt the corporate world, hindering liquidation, and thus impeding the improvement of productivity.

At present, the interest rate conditions have completely changed, and the number of bankrupt enterprises has indeed increased recently. However, the number of new enterprises has not yet reached a turning point, and the economic downturn may be an important reason.

However, there may be other factors hindering the turning point. Deutsche Bundesbank believes that one of the decisive factors is population structure. Economists wrote: "As the population ages, labor supply will also decline."

Economists believe that, according to the trend, innovative activities and risk-taking will also decrease in an aging society, "but these factors will play a key role in the process of enterprise creation". In addition, the econometric model also shows the correlation between the population structure and the number of start-ups.

Finally, economists also found another reason for the slow progress of productivity. "Excessive regulation and poor system quality may also have a negative impact on the vitality of enterprises in the euro area." Economists called for measures in this regard.

Economists at Deutsche Bundesbank said: "Structural reform is a key element in the government's ability to act." (Compilation/Zhong Sirui)