Economy of Germany Nowadays - Assignment Example

Economy of Germany Nowadays Germany, formally referred to as the Federal Republic of Germany, is a democratic county in central Europe and neighbors Denmark, the Czech Republic, Austria, Switzerland, France, Belgium and the Netherlands. The population of Germany is the largest in Europe after Russia. The country (Germany) like other Western states has established different political systems with corresponding political, economic and social institutions obligated with making critical decisions such as the allocation of resources across various regions of the state. The country is however faced with incidences of ethnic strife, political exclusion and the discrimination of the poor and vulnerable. Economy of Germany It is evident that the whole world has in one way or the other been influenced by the recent economic recession that has badly hit the international market. Germany is one such country whose economy was largely affected by the economic recession leading to inflations and a drop in currency value. The economy has since stabilized as it continues to invest in its economy. The value of the euro has since stabilized and the trend is approaching upward exponential growth. The current biggest hurdle facing the country is an ever-increasing rate of unemployment facing young youths who are joining the job market. This has been cited to arise from the high number of foreign labor infiltrating the market due to the competitive, lucrative industrial wage rate that attracts labor from all over the world to the disadvantage of its native labor force (Wall, 2010). Germany has since maintained its competitive labor market as compared to its neighboring states owing to a well-crafted wage rate with a competent and productive pool of labor. The economy of the country has been slowed down by post-German wars that incapacitated the state and brought down the economy to ground level as everything came to a halt. It took time for Germany to recover but even then, they could not restore their resources and degraded infrastructure to their previous state. Such set-backs are what impacted the economy. The other factor affecting the economy is the high rate of unemployment as earlier mentioned. The country has no capacity to absorb its labor force into developing the economy due to the increased growth rates and frequent infiltration of labor forces from the neighboring states. The slow economic growth rate has since resulted in a crisis of public funds that is essentially exacerbated by declining pressure on public revenues emanating from the stiff tax competition from Denmark, the Czech Republic, Switzerland, and France, among other neighboring states. The resultant tax cuts have coincided with the requirement under European Monetary Union that consolidates with the country’s resources leading to recurring incidences of austerity budgets. In analyzing the economy of the state, it is evident that its performance in the local and international arena has been face-lifted by the diverse economic activities and ventures undertaken by the state. The economic state of Germany has been improving owing to technological advancements that have been wholly embraced; and increased the rate of private investment from both local and foreign investors that has led to an accelerated growth rate within the economy contrary to what it was like some decades ago. One of the factors leading to increased investment and the enlargement of the business and corporate sector is due to a ready market from the large German population including the indigenous population and foreign inhabitants from all over the world. The political stability and peaceful coexistence among varied ethnic groups and tribes in the country has attracted a large proportion of private investors into the market. Improved exchange rates on the Euro at FOREX exchange and a stable economy arising from the corporate sector, banking and entrepreneurship have positively impacted on the economy of the state. The improved currency exchange rate works to the advantage of business operations in international trade; giving investors a competitive edge over those from the neighboring states. The government is also very supportive of corporate businesses and trade as it provides incentives and grants to potential investors, the country also imposes very friendly rates and levies on those undertaking trade both locally and internationally. The process of establishing businesses by foreigners from other states has been largely simplified in an effort to encourage private investors from across the globe. A high class infrastructural network across the country has also played an integral role in building the economy of the state and linking it to the rest of the world. With good infrastructure connecting major business centers and towns across Europe and beyond, Germany provides a platform for the effective and timely movement of goods and services to the international market and hence steadily builds the economy. Political The historical political environment of Germany inspires the development of other sectors of the economy to meet the needs of the people. The transitioning period from one set of leaders to another is usually seamless and logical. In most instances, their elections are done smoothly and peacefully and in case of disputes, they are resolved following the right course of justice. They are more organized as compared to their neighboring European states that resolve their differences using firearms and crude weapons of mass destruction. Having a good relationship with the other established states across the globe such as United Kingdom, U.S., and China has made Germany a great partner with such states and this is attributed to their good governance and visionary leadership. The good relationship with other states and trading partners in the corporate world increased their diplomatic weight in the global arena. In the current politics of the state, it is important to note the significance that good leadership plays in creating a harmonious and peaceful coexistence between the state, the neighbors and other stakeholders. It is evident that Germany has had political turmoil, war and strife following political disputes, but they have been quick to set structures in place to mitigate such heinous acts and conflicts associated with power struggles and political instability; and work towards establishing a more accommodative political system encompassing an efficient judiciary and court system. Such practices and measures have enabled the state to take massive strides in the course of attaining social justice. Subsequent leadership has since been supportive of the quest to establish political stability within the country and along its borders with neighboring states. The restoration of political stability to the state is what attracted investors from all over the world with the core objective of establishing their business empires without fear or doubt of the risk of losing their investments In my further analysis of the political climate of the state, it goes without say that the government plays a very big role in determining the prevailing political condition of the state based on the way they handle matters of national importance. The decisions that the government makes on behalf of the state portrays the stand taken by the whole state through the people in positions of power. Angela Merkel, Chancellor of Germany since 2005 and the leader of the Christian Democratic Union has been at the fore in promoting unity among European states. She also played an integral role in negotiating for the Treaty of Lisbon and the Berlin Declaration among other peace treaties, hence promoting peace and harmony among member states. Despite the diverse ethical affiliations of the residents and diverse political ideologies, the state had established a stable political dimension and a culture that respects the opinions of others. The judicial system is also well-structured and constituted to address disputes of whatever nature amicably. Social Issues Germany has been largely characterized by their German language, culture and other social practices and beliefs. The culture of Germany has since time immemorial assigned gender roles to men and women in the social domain. There is a tendency to give more attention to the boy child than the girls. When it comes to education, men were also educated more than their women counterparts as the woman were only expected to take care of their homes while men were expected to provide for the family and make crucial decisions on behalf of their communities. They take part in crucial decision-making as leaders of the state or community. This has since changed as women are considered for influential position as was the case with Angela Merkel who was democratically elected as the first woman Chancellor of Germany in 2005. It is evident that the standard of living for a proportional size of the population is below the average standard of living. The trend is however changing for the better with the emergence of an effective leadership protocol and radical exploitation of resources. These recent developments have led to the steady growth of the economy and a subsequent improvement in the living standards of the residents. The development of learning institutions, healthcare centers and market centers has worked to improve the livelihoods of the people by enhancing business operations and creating opportunities to learn and acquire knowledge; hence building capacity of the labor force. Developmental initiatives such as electrification and accessible road networks have boosted a series of economic activities from private and local investors. The production of electricity and harnessing of other renewable sources of energies work to provide the natives with reliable power supply and hence tremendously uplifts their living standards incredibly. The commitment and hardworking culture of the Germans has enabled them stand out and this as exhibited in all aspect of their livelihoods. With such resilience, the residents only require the support of the government to provide assistance in the acquisition of the resources needed to jumpstart their individual business projects in an effort to develop better standards of living and to fend for their families. Initiatives such as establishing educational and learning institutions across the state are very essential as they guarantee that the future population’s needs are not compromised and that all the students are empowered to provide skillful labor that meets both the local and international needs of the market. All the political, social and economic dimensions of the state have worked to establish one holistic state whose economy tends to grow by the day with continued infiltration of private investors into the economy. When these elements are harmoniously enhanced at their respective levels, they tend to build a strong sense of unity that distinguishes Germany from the rest of the European states. This has been further portrayed through their national flag, the government of the state and the court of arms. These elements tend to supersede social vices such as discrimination and prejudice along tribal and ethnic lines. Religious affiliation has in the recent times has become a major cause of strife, more so experienced in the neighboring states. There is need to sensitize the society on the importance of putting aside their differences and working to achieve a common goal. For instance, in Germany there are approximately 60% Christian and 26% Muslim faithful, while those who only believe in traditional practice comprise 9% of the populace, all of who live harmoniously without affecting the other’s freedom of worship. The emergence of civil societies and lobby groups works to keep the government in check and ensure that labor is sufficiently compensated. Labor unions are also useful at the organizational level; to fight for the rights of employees in an organization and avoid exploitation by corporate managers. Civil societies in Germany have helped the country to become a very strong civil-based society that takes into consideration the opinion of its members, the corporate world and civil groups in decision making processes. It is important to have such platforms where individuals share opinions and insights collaboratively to ensure a win-win strategy. Recommendations In order for the country to increase its economic growth, there is need for it to diversify more on its economic activities. The country should not rely on one sector of the economy but diversify to other areas such as textile and food processing industries. The importance of having alternatives works to distribute the risk should a natural calamity or any disaster occur and sweep away the country’s only source of revenue. In such a case, its economy would crumble and it will take the country a lot of resources to rise back to its prior position in the industrial grid as was the case after the post-Germany war. The country also needs to exploit more of the natural resources at their disposal. I believe that the country’s mineral resource endowment has not been fully discovered and utilized; and this includes the assembling and manufacturing industries and automobiles such as BMW, Benz, Volkswagen and other electronics. The government should invest more money and bring on board experts who have the capacity to study the possibility of the state having other mineral resources and other natural resources within the country. The areas in which mining is being done could also get a facelift to increase the efficiency, quality and productivity of the mining firms to deliver products that meet the market’s demands at very competitive market prices. In so doing, the country will establish great stability in its economy. The other recommendation lies in the fact that the country should ensure equitable distribution of resources across the state. Devolution of resources and power works to empower the growth of the entire nation and development is not limited the big towns as is the case of central governance. The distribution of resources to other regions works to reduce the burden on the central government in light of the planning of the states’ activities and development programs. It is a tall order for the government to know the particular needs of a region but for devolved governance, the leaders at the grassroots are the ones responsible for designing the project proposal and following up on their approval and the subsequent implementation process. Equitable distribution of resources will work to reduce the high influx of youths in towns in search of employment. With the devolution formula, resources will be distributed across the state and hence reduce the burden on towns to handle the overwhelming numbers of eligible workers. This recommendation also works to distribute risks in the sense that a case of an eminent attack on one of the manufacturing firms does not deter employees working in another town. It also helps the economy to grow faster as other small towns that were lagging behind will have an opportunity to catch up with rest by setting clear development initiatives that are aimed at developing the individual states. I recommend that the government ought to be more supportive of its statesmen, more so the vulnerable groups such as the youths, women and the older generation. Those with special needs or the disabled also ought to be included in development programs. The government could offer grants to such groups so that they can venture into businesses of their choice and work to build the economy in the long run. It is important for the state to be close to farmers and other indigenous residents and provide them with affordable farm inputs such as fertilizers, pesticides and other farm machineries at pocket-friendly cost. The taxes levied on such farm inputs need to be cut down to reduce the cost of farming and encourage more farmers to embark on their agribusiness ventures. Other than making the farming materials affordable and readily available to farms, there is an eminent need to educate farmers on good farming practices. This is a worthwhile venture that works to enlighten the farmers on some of the basic farming techniques required to realize greater yields. Most farmers in the rural set up have little knowledge on how to manage their farms in a professional manner to reduce the resurgence of weeds and increase the performance of their crops. This venture will have a direct effect on the economy of the state as there will be sufficient food, hence a healthy labor force to propel the agenda of the nation. Some of the food reserves can be exported to earn the country foreign exchange. Such a move will work to improve the livelihood of many people across the state. Lastly, on the political front, despite enjoying the prevailing political stability, there is need for the leaders to be proactive enough to the level of influencing the politics of the West as a whole. Germany stands to lose its foreign investors if the atmosphere surrounding the state is marred with wars and mass killings-due to religious wars and differing political ideologies in electioneering periods among European Union members. Such incidences are in most cases generalized to include other European states who fall victims of the ordeal. Regional leaders need to set down and devise ways of solving disputes within the region for the sake of promoting the reputation of the region and essentially draw confidence among potential investors. It is important that the Germany has a well spelt out strategic development plan for the state that has both short-term and long-term objectives that the country is working towards. This masterpiece plan works as a blue print that is used to gauge the performance of the country against the strategic plan and where the country ought to be in terms of development within a stipulated time. This lucrative plan gives the workers the inspiration to achieve the desired results. In conclusion, it is evident that Germany is one of the most successful Western states owing to the fact that it has a well-organized government structure, good leadership skills and public relations. It is essential for the leaders to have the qualities of an effective leader in order to have the capacity to lead the team until the set objectives are met. Leaders could also undergo training to increase their efficiency and ensure that valuable information is passed down to their employees. It is also important to note that a strategy that may favor the workforce one country may not produce the same results in another country hence the government needs to know what is best for their individual state bearing in mind their nature of operation and the political, social and economic issues influencing the economy. Reference Wall, S., MInocha, S. and Rees, B. (2010). International Business, 3rd edition, Financial Times/Prentice Hall Read More