126 RALF AHRENS AND ANDRÉ STEINER
supply of the new federal states. Moreover, although the growth of the
share of the service sector in foreign trade and foreign direct investments
accelerated, Germany was ultimately considered to be a country in which
the internationalization of the service sector was relatively low.^89
From an institutional perspective, reunifi cation only strengthened the
domestic focus of the German economy for a short time, which was to be
expected of a national market that expanded greatly almost overnight.
The “reunifi cation boom” that resulted from the high demand for mod-
ern capital and consumer goods in the new states, which was partially
fi nanced by government transfer payments, proved to be an enormous
stimulus package for West German industry. In fact, it cushioned the blow
of the international economic downturns that set in at the time. But this
boom came to an end in 1992, when the West German states plunged into
a longer phase of stagnation. At the same time, the geopolitical shift in-
duced by the fall of the Wall gave the West European economic and mon-
etary union a big boost, which benefi ted the new German federal states
in the long run. The French in particular pushed for the union as a coun-
terbalance to the sudden expansion of the German national economy.
Through the introduction of the Euro, the economic power of a reunifi ed
Germany was supposed to be harnessed for the rest of Europe. Yet, in
the end, the Bundesbank proved to be the model for the establishment
of an independent European Central Bank whose monetary policy was
committed to stabilization. In turn, this move proved to be crucial for the
fi rm establishment of convergence criteria in attaining EU membership.^90
Parallel to this intensifi cation of European integration, globalization
did more than just put individual companies under stronger pressure to
compete internationally. It also questioned the model of what was re-
ferred to as Germany Inc. (Deutschland AG). This network of industrial
corporations and their principal banks, which cultivated strong political
connections and close ties, had been growing since the days of the Ger-
man empire. A slight unraveling of the capital and personal ties began to
appear as early as the 1970s, but it was not until the 1990s that drastic
upheavals changed the facts of corporate governance in many of Germa-
ny’s largest companies. The growth in capital market fi nancing and the
involvement of international institutional investors led to an increased
reliance on shareholder value as the key benchmark for corporate gover-
nance in these joint-stock companies; at the same time, industrial rela-
tions organized along the traditional model of corporatism increasingly
came under pressure.^91
Shortly after reunifi cation, the need to coordinate the privatization of
the East German economy even seemed to give a boost to the “German
model” of corporatist cooperation between the state, industry, and the