In a dynamic, turbulent global macro-environment, some countries manage to occupy leading positions, while others do not succeed in the same way. Germany is often referred to as the flagship of industrial power in Europe and the world, since it represents the world's third largest exporter and second largest net exporter. These facts sound even more impressive when it is taken into account that it is the 19th most populous country. Germany is competitive due to a combination of factors, the most important being highly developed infrastructure, ability to innovate, relatively low level of corruption, enforcement of contractual obligations and bankruptcy proceedings, and macroeconomic stability, where it is ranked as the best in the world (WEF). In addition to the descriptive methods used to define competitiveness and the comparative method for comparison with other EU countries, economic models were also applied in the paper with the aim of understanding the extent to which certain price and non-price factors affect the competitiveness of the German economy. In both the fixed and random effect models, investment in research and development and foreign direct investment as non-price factors have a positive effect on competitiveness, while on the other hand, the effective exchange rate as a price factor and country management risk as a non-price factor have negative effect on competitiveness.