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Renewing Germany: Kohl's Legacy and Schroeder's Dilemma
The German economy has long been seen as the locomotive of European (and, on occasion, global) growth. Germany appeared to weather the stagflation of the 1970s more successfully than many other economies, and reunification in 1990 appeared to present opportunities for further growth. However, by the time Gerhard Schroeder was elected chancellor in 1998, many saw Germany as the new "sick man of Europe"--a title assigned to Britain during the 1970s. Burdened by the unanticipated high costs of integrating the former East Germany into the Federal Republic and choked by labor market regulations and dormant financial markets, German business was no longer seen as a world-beater. In this context, many argued for fundamental reform of German institutions, although many of these institutions seemed to have served Germany well during most of the post-World War II period.