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Economy of Germany
Skyline Frankfurt am Main.jpg
Currency Euro (EUR)[1]
Fiscal year calendar year
Trade organisations EU, WTO (via EU membership) and OECD
Statistics
GDP $3.673 trillion (2008)[1]
GDP growth 0,0%(Q4 2009)
GDP per capita $44.729 (2008)[1]
GDP by sector agriculture (0.9%), industry (30.1%), services (69%) (2008 est.)
Inflation (CPI) 0,3% (February 2010)[1]
Population
below poverty line
11% (2001)
Gini index 27 (2006)
Labour force 43.6 million (2008 est.)
Labour force
by occupation
services (67,5%), industry (29,7%), agriculture (2,4%) (2005)
Unemployment 7,5% (January 2010)[2]
Main industries iron, steel, coal, cement, chemicals, machinery, vehicles, machine tools, electronics, food and beverages, shipbuilding, textiles
External
Exports $1.498 trillion (2008 est.)
Export goods machinery, vehicles, chemicals, metals and manufactures, foodstuffs, textiles
Main export partners France 9.7%, US 7.1%, UK 6.7%, Netherlands 6.6%, Italy 6.4%, Austria 5.4%, Belgium 5.2%, Spain 4.4%, Poland 4% (2008)
Imports $1.232 trillion (2008 est.)
Import goods machinery, vehicles, chemicals, foodstuffs, textiles, metals
Main import partners Netherlands 12.5%, France 8.3%, Belgium 7.5%, China 6.2%, Italy 5.7%, UK 5.4%, Austria 4.3%, Russia 4.2%, US 4.2% (2008)
Public finances
Public debt 64.4% of GDP (2008 est.)
Revenues $1.591 trillion
Expenses $1.591 trillion (2008 est.)
Economic aid donor: $7.5 billion, 0.28% of GDP

GDP Germany is ranked on the CPI [2] 2009 as 14th for the perceived level of public sector corruption, with a confidence range between 7.7-8.3.

(2004)[3]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars

Germany is the largest national economy in Europe, the fourth-largest by nominal GDP in the world, and fifth by GDP (PPP) in 2008.[4] Since the age of industrialisation, the country has been a driver, innovator, and beneficiary of an ever more globalised economy. Germany is the world's second largest exporter with $1.170 trillion exported in 2009 (Eurozone countries are included).[5] Exports account for more than one-third of national output.[6]

The service sector contributes around 70% of the total GDP, industry 29.1%, and agriculture 0.9%. Most of the country's products are in engineering, especially in automobiles, machinery, metals, and chemical goods.[7] Germany is the leading producer of wind turbines and solar power technology in the world. The largest annual international trade fairs and congresses are held in several German cities such as Hanover, Frankfurt, and Berlin.[8]

Of the world's 500 largest stock market listed companies measured by revenue, the Fortune Global 500, 37 companies are headquartered in Germany. In 2007 the ten biggest were Daimler, Volkswagen, Allianz (the most profitable company), Siemens, Deutsche Bank (2nd most profitable company), E.ON, Deutsche Post, Deutsche Telekom, Metro, and BASF.[9] Among the largest employers are also Deutsche Post, Robert Bosch GmbH, and Edeka.[10] Well known global brands are Mercedes Benz, SAP, BMW, Adidas, Audi, Porsche, Volkswagen, and Nivea.[11]

As of September 2008, as measured by ILO standards the German unemployment rate was 6.2 percent (compared with 7.4 percent as measured by German standards).[12]

Contents

History

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Nazi Era

The economy of Germany during the Hitler era (1933 – 1945) developed a hothouse prosperity, supported with high government subsidies to those sectors that Hitler favored because they gave Nazi Germany military power and economic autarky, that is, economic independence from the global economy.

Adolf Hitler, believing that "the economy is something of secondary importance",[13] left the details of the economic National Socialist Programme out of Mein Kampf.[14] The Nazis rose to power while unemployment was very high,[15] but achieved full employment later thanks to massive rearmament.[16] Their pre-war economic policies, resembling Keynesianism, were in the beginning the brainchildren of their non-Nazi Minister of Economics, Hjalmar Schacht,[15] who was later made to focus more on war production (cf: Military Keynesianism), and was eventually replaced by a Nazi, Hermann Göring.

The trading policies of the Third Reich aimed at discouraging trade with countries outside the German sphere of influence,[17] while making southern Europe largely dependent on Germany.[18] Eventually, the Nazi party developed strong relationships with big business[19] and abolished trade unions[20] while real wages dropped by a fourth,[16] and employees could not easily change employer.[20] Taxes, though, were still low well into the war.[21] Already before the war, people undesirable to the regime were used as slave labour, and in 1944 they reached one quarter of the workers.[22]

Wirtschaftswunder of the West

Beginning with the replacement of the Reichsmark with the Deutsche Mark as legal tender, a lasting period of low inflation and rapid industrial growth was overseen by the government led by German Chancellor Konrad Adenauer and his minister of economics, Ludwig Erhard, raising West Germany from total wartime devastation to developed nations in modern Europe.

Contrary to popular belief, the Marshall Plan, which was extended to also include Western Germany after it was realized that the suppression of the Western German economy was holding back the recovery of the rest of Europe,[23] was not the main force behind the Wirtschaftswunder.[24][25]

Nonetheless, the amount of monetary aid (which was in the form of loans) received by Germany through the Marshall Plan (about $1.65 billion in total) was far overshadowed by the amount the Germans had to pay back as war reparations and by the charges the Allies made on the Germans for the ongoing cost of occupation (about $2.4 billion per year).[24] In 1953 it was decided that Germany was to repay $1.1 billion of the aid it had received. The last repayment was made in June 1971.[25]

Apart from these factors, hard work and long hours at full capacity among the population in the 1950s, 1960s and early 1970s and extra labour supplied by thousands of Gastarbeiter ("guest workers") provided a vital base for the economic upturn.

East Germany

The Trabant was the most important car manufactured in the GDR.

By the early 1950s the Soviet Union had seized reparations in form of agricultural and industrial products and demanded further heavy reparation payments.[26] Lower Silesia, which contained coal mines, and Stettin, a prominent natural port, were given to Poland.

Exports from West Germany exceeded $323 billion in 1988. In the same year, East Germany exported $30.7 billion of goods; 65% to other communist states.[27] East Germany officially had zero unemployment.[27]

In 1976 average annual GDP growth was roughly 5.9%.[28]

Post-reunification

Due to Germany's aging population and struggling economy, the welfare system came under a lot of strain from the 1990s. This led the government to push through a wide-ranging programme of belt-tightening reforms, Agenda 2010, including the labour market reforms known as Hartz I - IV.

2008–2009 Recession

The nominal GDP of Germany contracted in the second and third quarters of 2008, putting the country in a technical recession following a global and European recession cycle.[29] German industrial output dropped to 3.6% in September vis-a-vis August.[30][31] Sebastian Wanke at Dekabank predicted: "There won't be an improvement in the fourth quarter. The situation will only get worse." Carsten Brzeski at ING Financial Markets said: "Anecdotal evidence and leading indicators are scary."[32] In January 2009 the German government under Angela Merkel approved a €50 billion ($70 billion) economic stimulus plan to protect several sectors from a downturn and a subsequent rise in unemployment rates.[33]

New Bundesländer

With unification on October 3, 1990, Germany began the major task of bringing the standard of living of Germans in the former German Democratic Republic up to that of western Germany. Since reunification, hundreds of thousands of former East Germans have migrated into western Germany to find work. Drastic changes in the socioeconomic landscape brought about by reunification have resulted in troubling social problems. Economic uncertainty in eastern Germany is often cited as one factor contributing to extremist violence, primarily from the political right. Confusion about the causes of the current hardships and a need to place blame have found expression in harassment and violence by some Germans directed toward foreigners, particularly non-Europeans.

Even after the German reunification in 1990, the standard of living and annual income remains significantly higher in the former West German states.[34] The modernisation and integration of the eastern German economy continues to be a long-term process scheduled to last until the year 2019, with annual transfers from west to east amounting to roughly $80 billion. The overall unemployment rate has consistently fallen since 2005 and reached a 15-year low in June 2008 with 7.5%.[35] The percentage ranges from 6.2% in former West Germany to 12.7% in former East Germany.

Sectors

Primary

In 2008 agriculture, forestry, and mining accounted for only 0.9% of Germany’s gross domestic product (GDP) and employed only 2.4% of the population,[7] down from 4% in 1991.[citation needed] Much of the reduction in employment occurred in the eastern states, where the number of agricultural workers declined by as much as 75% following reunification.[citation needed] However, agriculture is extremely productive, and Germany is able to cover 90% of its nutritional needs with domestic production.[citation needed] In fact, Germany is the third largest agricultural producer in the European Union after France and Italy.[citation needed] Germany’s principal agricultural products are potatoes, wheat, barley, sugar beets, fruit, and cabbages.[citation needed] Despite Germany’s high level of industrialization, roughly one-third of its territory is covered by forest.[citation needed] The forestry industry provides for about two-thirds of domestic consumption of wood and wood products, so Germany is a net importer of these items.[citation needed]

Industry

The world's largest coherent chemistry plant BASF near Ludwigshafen

Industry and construction accounted for 29% of gross domestic product in 2008, and employed 29.7% of the workforce.[7] Germany excels in the production of automobiles, machine tools, and chemicals. With the manufacture of 5.5 million vehicles in 2003, Germany was the world’s third largest producer of automobiles after the United States and Japan, although the People's Republic of China was threatening to displace Germany in the world rankings as early as 2005.[citation needed] In 2004 Germany enjoyed the largest world market share in machine tools (19.3%).[citation needed] Of vital importance is the role of small- to medium-sized manufacturing firms, which specialize in niche products and often are owned by management.[36]

Tertiary sector

In 2008 services constituted 69% of gross domestic product (GDP), and the sector employed 67.5% of the workforce.[7] The subcomponents of services are financial, renting, and business activities (30.5%); trade, hotels and restaurants, and transport (18%); and other service activities (21.7%).[citation needed]

Infrastructure

Hamburg harbour is the second-largest port in Europe.

With its central position in Europe, Germany is an important transportation hub. This is reflected in its dense and modern transportation networks. The extensive motorway (Autobahn) network that ranks worldwide third largest in its total length and features a lack of blanket speed limits on the majority of routes.[37]

Germany has established a polycentric network of high-speed trains. The InterCityExpress or ICE is the most advanced service category of the Deutsche Bahn and serves major German cities as well as destinations in neighbouring countries. The train maximum speed varies between 160 km/h and 300 km/h. Connections are offered at either 30-minute, hourly, or two-hourly intervals.[38]

The ICE 3 trainset

Germany is the world's fifth largest consumer of energy, and two-thirds of its primary energy was imported in 2002. In the same year, Germany was Europe's largest consumer of electricity, totaling 512.9 terawatt-hours. Government policy promotes energy conservation and the development of renewable energy sources, such as solar, wind, biomass, hydroelectric, and geothermal energy. As a result of energy-saving measures, energy efficiency has been improving since the beginning of the 1970s. The government has set the goal of meeting half the country's energy demands from renewable sources by 2050.

In 2000, the government and the German nuclear power industry agreed to phase out all nuclear power plants by 2021.[39] The government changed it's mind in January 2010 deciding to keep nuclear power plants open. Renewable energy still plays a more modest role in energy consumption. In 2006, energy consumption was met by the following sources: oil (35.7%); coal, including lignite (23.9%); natural gas (22.8%); nuclear (12.6%); hydro and wind power (1.3%); and other (3.7%). However, the share of renewable energy in electricity supply has been rapidly increasing, reaching 14% in 2007. The German government has set a new target to increase this share to 27% by 2020.

See also

References

^  Before 2002: Deutsche Mark (DEM).

  1. ^ a b c "World Economic Outlook Database, October 2009". International Monetary Fund. October 2009. http://www.imf.org/external/pubs/ft/weo/2009/02/weodata/weorept.aspx?sy=2007&ey=2009&scsm=1&ssd=1&sort=country&ds=.&br=1&c=134&s=NGDP_RPCH%2CNGDPD%2CNGDPDPC%2CPCPIPCH%2CLP&grp=0&a=&pr1.x=41&pr1.y=9. Retrieved 2009-10-14. 
  2. ^ Euro area unemployment rate at 9.9% - Eurostat. 1. March 2010
  3. ^ Aid and Development - BBC News
  4. ^ Rank Order - GDP (purchasing power parity) CIA Factbook 2005. Retrieved 31 December 2006.
  5. ^ German trade surplus hits record, BBC, 8 February 2006, Retrieved 3 January 2007.
  6. ^ Library of Congress – Federal Research Division (April 2008). "Country Profile: Germany" (pdf). pp. 10. http://lcweb2.loc.gov/frd/cs/profiles/Germany.pdf. Retrieved 2009-01-11. "Exports are responsible for one-third of total economic output, and at the prevailing dollar–euro exchange rate, no country exports more merchandise." 
  7. ^ a b c d CIA. "CIA Factbook". https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html. Retrieved 2009-08-02. 
  8. ^ Wind Power Federal Ministry of Economics and Technology (Germany) Retrieved 30 November 2006.
  9. ^ Global 500 Germany, CNN Money, Retrieved 26 November 2007.
  10. ^ Global 500 Biggest Employers, CNN Money, Retrieved 26 November 2007.
  11. ^ The 100 Top Brands 2006, Businessweek, Retrieved 26 November 2007.
  12. ^ Bundesagentur für Arbeit Nürnberg. "Monatsbericht Oktober 2008" (in German) (pdf). pp. p 15. http://www.pub.arbeitsamt.de/hst/services/statistik/000000/html/start/monat/aktuell.pdf. Retrieved 2008-11-23. 
  13. ^ Henry A. Turner, "Hitler's Einstellung", 1976, p. 90–91
  14. ^ Henry A. Turner, "German Big Business and the Rise of Hitler", Oxford University Press, 1985. p.77
  15. ^ a b "http://econ161.berkeley.edu/TCEH/Slouch_Purge15.html". http://econ161.berkeley.edu/TCEH/Slouch_Purge15.html. Retrieved 2007-08-15. 
  16. ^ a b "econ161.berkeley.edu". http://econ161.berkeley.edu/TCEH/Slouch_Purge15.html. Retrieved 2007-08-15. 
  17. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 101
  18. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 102
  19. ^ Arthur Schweitzer, "Big Business in the Third Reich", Bloomington, Indiana University Press, 1964, p. 288
  20. ^ a b Nazis and Soviets
  21. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 114
  22. ^ Michael Thad Allen, "The Business of Genocide", The University of North Carolina Press, 2002. p. 1
  23. ^ "Pas de Pagaille!", July 28, 1947
  24. ^ a b German Economic "Miracle" by David R. Henderson
  25. ^ a b "Marshall Plan 1947-1997 A German View" by Susan Stern at the Internet Archive
  26. ^ Norman M. Naimark. The Russians in Germany: A History of the Soviet Zone of Occupation, 1945-1949. Harvard University Press, 1995. ISBN 0-674-78405-7 pp. 167-9
  27. ^ a b "Germany starts recovery from €2,000bn union". Times Online. 2007-08-24. http://www.timesonline.co.uk/tol/news/world/europe/article2317382.ece. Retrieved 2009-10-12. 
  28. ^ "Business America. (27 February 1989). German Democratic Republic: long history of sustained economic growth continues; 1989 may be an advantageous year to consider this market - Business Outlook Abroad: Current Reports from the Foreign Service.". http://findarticles.com/p/articles/mi_m1052/is_n4_v110/ai_7373809. Retrieved 2007-10-02. 
  29. ^ "Germany officially in recession as OECD expects US to lead recovery". The Guardian. 14 November 2008. http://www.guardian.co.uk/world/2008/nov/14/oecd-recession-germany-inflation-deflation. 
  30. ^ bloomberg.com, German Economy Enters Worst Recession in 12 Years
  31. ^ ap.google.com, German economy falls into recession
  32. ^ news.bbc.co.uk, German economy now in recession
  33. ^ "Germany agrees on 50-billion-euro stimulus plan". France 24. 06 January 2009. http://www.france24.com/en/20090106-germany-agrees-new-50-billion-euro-stimulus-plan. 
  34. ^ Berg, S., Winter, S., Wassermann, A. The Price of a Failed Reunification Spiegel Online International. 5 September 2005. Retrieved 28 November 2006.
  35. ^ Arbeitslosenzahl unter 3,2 Millionen gesunken(German) Tagesschau, Retrieved 1 July 2008.
  36. ^ Venohr, Bernd and Meyer, Klaus E. (2007). "The German Miracle Keeps Running: How Germany's Hidden Champions Stay Ahead in the Global Economy". Working Paper 30. FHW Berlin. http://www.berndvenohr.de/download/veroeffentlichungen/forschung/The_German_Miracle_Keeps_Running.pdf. Retrieved 2009-10-09. 
  37. ^ "Autobahn-Temporegelung" (in German) (PDF). ADAC. October 2007. http://www.adac.de/images/SP_Tempolimit_V%201%2E0_tcm8-199598.pdf. Retrieved 2008-11-15. 
  38. ^ Geschäftsbericht 2006 der Deutschen Bahn AG, Deutsche Bahn, Retrieved 19 October 2007.
  39. ^ Germany split over green energy, BBC, Accessed 13 April 2007

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