Günter Minnerup’s recent article on West Germany (nlr 99) is to be welcomed as a study of the economic and political transformations that have taken place in what is now the most powerful eec country. Minnerup, however, neglects a key aspect of these changes: the growth in West German foreign investments. This communication may do something to supplement nlr’s discussion in this respect; its aim is to document the very striking economic changes which, inevitably, will change Bonn’s role in international affairs within the capitalist and imperialist world. To put the issue in its starkest light: in 1976 West German investment overseas exceeded, for the first time since the war, total foreign investment in West Germany (see Table 1). Until now, the West German and Japanese economies have been contrasted to the us and uk ones. The former showed a much higher rate of internal investment and their international success rested upon their export of their own manufactures. The two major ‘Anglo-Saxon’ economies, by contrast, are dominated by banking and finance capital that invests abroad directly, and by large international firms which also export their investments rather than finished products. It now seems, however, that West Germany is moving closer to the ‘Anglo-Saxon’ model, if it can be called that; partly because the strength of its currency allows it to, but also because this very strength obliges West German companies to protect their overseas markets by making use of the now often much cheaper labour to be found outside the borders of the Bundesrepublik.footnote1

West German firms appeared late on the post-war international scene. Initially, this was attributed to psychological inhibitions, since German property abroad had been expropriated as a consequence of the two world wars,footnote2 combined with the general ban on direct investments abroad which was not lifted until 1952 and the non-convertibility—up to 1958—of the D-mark.footnote3 But psychological states of mind and legal prohibitions cannot provide us with an adequate interpretation of the events, unless they are related to the actual economic situation of a particular time period. In the fifties and early sixties higher profitability was earned from domestic projects than that from expansion abroad, mainly because the home market was quite unsaturated and the government was granting special incentives for home investment in the form of high depreciation rates and various forms of tax relief.footnote4 Later, as home costs soared (and the D-mark revaluations made exports more expensive and foreign investments cheaper), profits were squeezed tightly and many West German companies were forced to venture overseas.footnote5 Added to this was a reluctance to accept extra ‘guest’ workers in West Germany, when subsidiaries could be set up in the labour-abundant countries; also the introduction at home of stringent (that is, costly) regulations affecting the air-and water-polluting industries, especially steel and chemicals, which motivated West German firms to dump their factories in other countries.