Domestic economy and international economic relations

Domestic economy and international economic relations

The domestic economy of Germany

The German economy is full of contradictions. It is modern but old fashioned. It's immensely powerful but suffers from serious structural weaknesses. It is subject to national laws and rules but are so closely tied to the European Union is no longer truly independent. It has a central bank that European monetary policy controls and have a deeper impact on the global economy but also insist on making decisions based primarily on domestic considerations. Finally, although Germany has to compete against highly efficient outside their own continent economies, continues to bear the cost and burden of traditional industries that drain resources that could be better used elsewhere.

The German economy as it is known today is a result of the 1990 merger between the dominant economy of the Federal Republic of Germany (FRG, or West Germany) and the German Democratic Republic (GDR, or East Germany) . This fusion product day massive economic entity that constitutes the fulcrum of Europe as a production center and a transportation and communication center. But each member brings several items to the mixture, and melting has proven difficult and expensive. The merger will dominate economic policy and the reality of Germany until well into the next century.

The record of the economics of R. F. German during the four decades before unification demonstrates a landmark achievement. The first decade of the 50s that had been the "economic miracle." The second decade of the 60's that had considered the consolidation and the first signs of trouble. The 70s had brought oil shocks, generous social programs, rising deficits, and ultimately a loss of control. In the 80s, the new policies in the country and a more stable environment abroad had combined to put Germany back on the path of growth.

The East German economy had been a powerhouse in Eastern Europe, where Moscow had trusted her to produce machine tools, chemicals, and electronics. But had grown increasingly ineffective, and its currency had become worthless outside their own borders. East Germans had felt frustrated at his lack of real material welfare and their lack of freedom. Enthusiastically joined its economy with that of Germany in 1990. The merger gave them a rude shock, however, partly due to the simultaneous collapse of the East German markets in the Soviet empire and partly due to inefficiencies that the communist system had left behind.

The German economy together is a dominant force in world markets due to strong export orientation has been part of the German tradition for centuries. Although loads of unification have been cut in the traditional export surplus Federal Republic of Germany, German industry continues to produce some of the best machine tools, automobiles, cars, chemicals, and engineering products in the world. Its management culture that blends competition and cooperation, quality and durability stresses above all other virtues. Because many German companies are small or medium sized, can focus on some production lines to compete effectively even if they are expensive.

German culture of cooperation also extends to the relationship between the private sector and government. The social market economy, in which all system elements cooperate, stresses the importance of having all parties to work together social contract. Workers play a role in management. Managers mixed with workers. The bureaucracy seeks to create an environment in which all parties to respond to a common purpose. Although the rules established to prevent recurrence of the German cartel system of the last century are strictly enforced by the Bundeskartellamt (Federal Cartel Office), certain practices that would be prohibited under United States laws relating to competition is widely tolerated in Germany.

The dominant force in the German economy is the banking system. The central bank, the Bundesbank, is deeply committed to maintaining the value of the nation's currency, the German mark, even at some cost to the economic development potential. Inflation fears above all other diseases and is determined to prevent recurrence ruinous inflation of Germany's great early-20s. Private banks also play an important role. The industrial and service companies rely much more on German bank finance than equity capital. Banks provide money and turn sit on supervisory boards of most corporations in Germany. From that vantage point, stressed the traditional virtues of banking slow but steady and nonrisky growth. His influence and thought permeate the economy.

The German agriculture is not as strong as German industry. It is a relatively small part of the gross domestic product (GDP) and is heavily subsidized by the eU Common Agricultural Policy (CAP) and the German government itself. The accession of East Germany a united Germany expanded the relative size of the agricultural sector and its efficiency improved somewhat, but Germany is not a farmer as Spain or Italy.

Germany developed a system of high wages and high social benefits in Germany has been transported together. The degree and the generosity of social programs now come from Germany at a competitive disadvantage with respect to the states of Eastern Europe and Asia. German labor costs are above those of most other states, not because wages themselves - which are high by global standards but not out of line with German labor productivity - but because of the social costs, loads imposed equal to the wages themselves. Thus, German companies and German workers must decide either to abandon some of the social programs that are the basis of the social market economy revered or risk them losing out in global competition increasingly intense of the 90 and beyond. The Germans have not solved this problem, but are beginning to address it more seriously than before.

International Economic Relations

Since its inception in 1949, the Federal Republic of Germany (FRG), or West Germany, while also was called until its unification in 1990 with the German Democratic Republic (GDR, or East Germany), has played a role increasingly important in the global economy. Consistently among the major trading nations of the world, Germany derives often a higher share of their gross domestic product (GDP) of exports important than any other state. The Federal Republic plays a bigger role in international financial matters. Its modernity, the German Mark, is the second currency in the world after the U.S. dollar.

Germany does not act alone in international economic matters. Instead, generally acting through Europe. Germany was a founding member of the community of European coal and steel (ECSC) and the European Community then (EC), known since late 1993 as the European Union (EU). Germany becomes increasingly international policies in conjunction and consultation with other members of the EU. More than half of its trade is with other EU states, and the German mark is the anchor of the European Monetary System (EMS) and its projected continuation, the European Monetary Union (EMU).

Despite its central role in the global economy, Germany has never developed or has sought a high profile as a major international economic player. Receives far less attention than Japan U.S. newspapers and economic journals, but handled as least as much influence on global financial issues. This relative discretion reflects the general reluctance of Germany to the projection on the world stage in economic and constant German desire to integrate its economy into the EU. Germany has benefited from a benign economic climate striking for the last half-century. Despite occasional crises - such as the effects of the U.S. decision to end the dollar's link to gold in 1971 and the "oil shocks" of the 70 resulting from sharp increases in exporters price of oil - the global economic scene has been remarkably stable compared to the 20s and the 30s. This stability has led to the kind of international trading status Federal Republic of Germany represented and united Germany is expected to become once unification is complete.

Under the leadership of the United States, the Western world with free-market economies established the International Monetary Fund (IMF) and the World Bank in 1944. In 1947 these nations created a commercial structure virtually universal, agreement on overall rates and Trade (GATT). The combination of open trading and financial systems has helped to promote continued and even dramatic expansion since World War II world trade and international capital liquidity. Nothing could have better meet Federal Republic of Germany and Germany now united. The productive capacity of East Germany and West Germany always exceeded the absorptive capacity of their respective domestic markets. From the point of view of R. F. German, this feature helped fuel the German export drive and generate investment capital. Also consolidated the German mark and helped make Germany's economy internationally prominent.

Although Germany has an overall modern and commercial sector of the world-class, the German economy remains essentially continental in focus. Because the economy lacks the size needed to address the effects of truly massive flows of modernity, Germany has sought international partners on economic matters as it has in international strategic and political matters.

The German government and the Bundesbank, Germany's central bank, are active participants in formal and informal institutions and international arrangements relating to global finance and the coordination of national economic policies. Germany was a founding member of the association of free-market economies known as the Group of Five (G-5), which later became the Group of Seven (G-7). But the German government has also had to recognize that it can conduct an independent Bundesbank policies, which are based most often on the domestic needs of Germany than in the outside world wishes.
Fuente:
http://www.germanculture.com