Since usually countries in Europe have high quality of welfare system, I always presume that the economics of these countries are be less competitive than those with less welfare system. The article "Europe's engine: Why Germany needs to change, both for its own sake and for other " in The Economists draws my attention because it gives me the new outlook about Germany.
The article gives information about Germany's economy. It says that from 2000 to 2008 Germany can reduce labor cost 1.4% whereas the US can reduce only 0.8%. Moreover, although countries in Europe suffer much from the economic cirsis in 2008, German' s economy is better than it was ten years ago. It is explained that Germany adopt many structural changes in the economy. And Germany benefits greatly from exporting in EU zone because now every country in EU use the same currency therefore they cannot devalue their money to increase thier competitiveness against Germany. Moreover, German prefer saving to spending; this causes great surplus for the country to invest aboard.
German are well-known for their well-disciplined and hard-working habits. Although now China substitute Germany as the world number one exporter, Germany still has greatest surplus. This reflect how strong and robust Germany's economy is. Germany can weather economic crisis while it can maintain competitiveness. Despite the fact that tax rate in Germany is very high, it can reduce the labor cost without causing much problems on laying off the native employee. This should be a good example for many developing countries which believe that they should avoid investment in infrastructure, keep labor wage low and let people live in bad condition so that they can maintain their competitiveness in international market.
The article gives information about Germany's economy. It says that from 2000 to 2008 Germany can reduce labor cost 1.4% whereas the US can reduce only 0.8%. Moreover, although countries in Europe suffer much from the economic cirsis in 2008, German' s economy is better than it was ten years ago. It is explained that Germany adopt many structural changes in the economy. And Germany benefits greatly from exporting in EU zone because now every country in EU use the same currency therefore they cannot devalue their money to increase thier competitiveness against Germany. Moreover, German prefer saving to spending; this causes great surplus for the country to invest aboard.
German are well-known for their well-disciplined and hard-working habits. Although now China substitute Germany as the world number one exporter, Germany still has greatest surplus. This reflect how strong and robust Germany's economy is. Germany can weather economic crisis while it can maintain competitiveness. Despite the fact that tax rate in Germany is very high, it can reduce the labor cost without causing much problems on laying off the native employee. This should be a good example for many developing countries which believe that they should avoid investment in infrastructure, keep labor wage low and let people live in bad condition so that they can maintain their competitiveness in international market.
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References
Europe's engine: Why Germany needs to change, both for its own sake and for other (2010, Mar 11th), The Economist. Retrieved Mar 12th, 2010 from http://www.economist.com/opinion/displayStory.cfm?story_id=15663362&source=hptextfeature
I wonder, does Liu's example of Germany contradict teh opinion about socialism that I stated in my comment on Mod's post "Greece's Difficult Task"?
ReplyDeletePerhaps I was too hasty in part of my response there.