Is the case for higher investment therefore completely without merit? No, but arguments in favour do not stem from cyclical considerations: they stem from structural considerations. Where Germany’s growth potential is concerned, there is agreement that higher public investment does have a role to play. With regard to the size of the investment gap, however, there is probably no agreement.
The other part is that large segments of the manufacturing sector, because of their exposure to growing competition from Asia and because of the higher Canadian dollar, will expand less rapidly relative to other sectors. As this process unfolds, labour and capital are reallocated across economic sectors.