Country Analysis of Germany - Assignment Example

Name: Name of Country Analysis: Germany ECON 1101- 702 FL 2014 Germany is one of the Europe`s largest countries located in the north central of the European continent. It is a country traversing the continents major physical features from the ranges of the Alps Mountains to the varying landscape of the central German highlands. The chancellor of Germany is the overall political leader of the country and the top most head of the federal government of the republic of Germany. This particular leader is tasked with selecting the members of the government such as ministers and presiding over the cabinet meetings. This particular office of the chancellor was first created in the year 1867 when the leader was Otto Von Bismarck or simply the chancellor of Germany. Otto Von Bismarck the first leader under the title served from the year 1867 to 1890 and is credited as the longest serving chancellor of the German state up to date. During the period of 1918, the Weimar constitution made it clear that the chancellor was appointed by the president but responsible to the parliament. However this particular constitution was set aside during the Nazi dictatorship period which lasted from the year 1933 to 1945. The leader during this period was the dictator Adolf Hitler. However in the year 1949, the German constitution reinstated the powers of the chancellor and therefore the powers of the office of president diminished. Since 22nd November in the year 2002, the office of the chancellor has been held by the female leader called Angela Merkel. She is a Christian leader serving a democratically elected government of the democratic union of Germany. Konrad Aden au er served as the leader of the Germany as from the year 1953 to 1957 under the party called Christian – Democratic Union. Ludwig Erhad served as the leader from the year 1962 to 1965 under the same party as Konrad. Thereafter, Kurt Georg Kiesinger served as the German leader still under the same party as from the year 1965 to 1969. But as from the year 1969, there was change in the ruling party. The leadership of the country was now under the Social Democratic Party (SDP). During this particular period, the government was democratically elected by the German citizens through the secret ballot system which was preferred due to its minimal election bias. This is unlike during the reign of Dictator Adolf Hitler (1933-1945). Under the social democratic party, as from the year 1969 to 1982, the leaders of the nation were Willy Brandt and Helmet Schmidt. They were credited as democratically elected leaders who extensively valued the core rights of the citizens. As from the year 1982 to the year 1998, the country`s leadership returned to the Christian democratic union party. The nation leader was Helmet Kohl. It is during this period that the unification of East and West Germany was undertaken. The leader of the nation was tasked with fostering the good relations between the East and West Germany. After the reign of the Helmet Kohl ended in the year 1998, Gerhard Schroder under the party called social democratic party took over and led the country up to the year 2005 from where the current leader of Germany Angela Merkel assumed power through democratic elections. The German state is not a colony of any nation, though East Germany had been occupied by the Russians for some time. Indeed Germany is one of the countries that colonized some African states during the period of scramble for Africa in the advent of the 19th century. Germany colonized countries such as Tanzania. Since Germany was never colonized, then it is true to claim that it never gained independence from any country. It is the nation that started the first and second world wars against countries such as Britain, France and the United states. Under the leadership of the dictator Adolf Hitler, the country`s army also started the second world war where many jaws totaling to around six million were killed though the war ended after the country`s army was brought down by the allied armies of Britain, Russia and the united states. After Berlin was captured by the Russian army, Hitler committed suicide therefore ending the Second World War in the year 1945. The German state is a country that is nowadays peaceful and not involved in direct wars with any nation across the world. But Germany is a member of the NATO alliance which implies and its troops are normally in action in troubled parts of the Middle East. Its army has been in action recently in the Afghanistan and Iraq to participate on the war on terror against the al Qaeda network though they pulled back their troops after the stipulated time of service expired. During the Second World War, the Germans fought the Russians heavily and annexed into their territory before being pulled back by the mighty Russian army. It’s true to claim that the German state is not a former soviet bloc country like the likes of Ukraine. The corruption levels in Germany are relatively low when compared with the rest of the nation across the globe. Germany is ranked as the 11th least corrupt country by the transparency international as of the year 2014. This clearly proves that integrity really exists in its major institutions of service to nation. Figure 1: Portrait of Adolf Hitler Figure 2: Portrait of Angela Merkel Germany can arguably be defined as a modern developed country or nation which has been fully industrialized and tops the world economies. Before the period of 1800, Germany was a heavily rural populated country with some few urban centers being put up. However this was not the trend at the advent of the 19th century as a rapid stage of economic growth was eminent. Heavy industries mostly the manufacturing industries were set up and by the mid of 19th century, Germany was the largest economy in the continent of Europe. This fact of large economy was the fact that led to the countries involvement in the first and the second world wars. A fact to respect is that during the 1950s and 1960s. West Germany underwent an economic miracle with the help of the so called Marshal plan unlike the East Germany which was poor. Even to date, Germany is the largest individual economy within the European Union zone with roughly three (3) trillion dollars as the annual gross domestic product. Therefore we can say that Germany was only an emerging economy during the early years of the 19th century but one of the world`s largest economy in the 20th century. Therefore Germany is a developed country in the modern day environment. The industrial revolution was the key driver of the Germany economy. The considerable country`s assets were the most essential elements of the industrial revolution. These essential elements are; the highly skilled labor force, excellent high quality educational system, strong polite work ethics, excellent standards of living and the very sound protectionist strategies. The northern German states were mostly rich in natural resources than the southern states. They possessed vast agricultural tracts from the Schleswig-Holstein in the west of the country to the Prussia in the eastern area of the country. They had coal and iron in the Ruhr valley. So simply to state is that northern Germany had great fortunes considering its population. The southern states of Germany were relatively poor in the perspective of the natural resources deposits. And therefore its residents could only engage in small business activities limiting the development of their economy. The German banks played a crucial role in the acts of financing the industrial revolution in Germany. Different banks formed cartels in different industries such as cartel contracts were legally accepted before the German courts. Good transport network was essential towards proper and maintaining the economic growth. Excellent road and railway networks were constructed and served the purposes of the national defense, means of improvement of the culture and most important was that the excellent transport network secured the community from the dearth, famine and excessive fluctuations of prices of the basic necessities. Chemical research programs in the state’s universities and industrial laboratories became fruitful as they led Germany towards becoming the world’s leader in the chemical industry. This specific industry helped Germany to realize huge profits most of it being foreign exchange income. The Bayer and BASF, both German companies, grew and became multinational companies in the chemical industry and the pharmaceuticals. By the year 1914, Germany had already monopolized the world`s chemical industry by commanding up to 90% of the particular industry. Even to date, the pharmaceutical industry is still commanded by the Germany with nation having a majority stake in the industry of consideration. The German state employs the social market economic system. Its citizens proudly label it as “Soziale Marktwirtschaft”. The reason behind this particular label is that this system of economy was developed shortly after the Second World War. This label entails the social and the human dimensions. Germans embraced a market system that did not favor the wealthy but also cared for the workers’ rights. This specific economy system propelled the West Germany economy towards an extensive social welfare system unlike the East Germany which had been occupied by the soviets. The Germany economy is both conservative and dynamic. It is conservative in the sense that it entails the German tradition that envisages the state`s role in the economy and takes into account the cautious attitude. It is dynamic in the manner that it is directed towards growth. We can conclude that this type of economy system combines the virtues of the market system with devolved virtues of the social welfare system. After the Germany unification and the bringing down of the Berlin wall in the year 1990, $ 2 trillion was invested towards the rehabilitation of the East Germany economy. Figure 3: The Berlin wall < http://ias.umn.edu/2014/11/06/kuftinec/> The size of the German economy is enormous. It is an economy that is extremely diversified with major companies investing overseas therefore bringing a lot of income to the companies home country. Germany is indeed one of the Europe`s largest economy and also one of the world`s largest individual economy. Germany is positioned number one in Europe and number four in the world by the value of its nominal GDP. Germany is arguably the founding the founding member of the European Union and the Euro zone. It is the world`s number three exporter of goods with value of annual transactions hitting a maximum of $ 1.516 trillion as of the year 2012. This actually accounted for more than a third of the national income. As of the year 2014, nominal GDP totaled to $ 3.915 trillion whereas the GDP in terms of (PPP) it was established to total to about $ 3.486 trillion. GDP per capita was $ 45, 925 with the services industry accounting for at least 70 % of the total value. Industries accounted for 29% whereas the agricultural sector accounted for only one 1% of the total value of the annual GDP income. Germany posses a diversified working force that actually comprises of the world class professionals such as engineers, doctors and other high caliber specialists. The labor force was estimated to be 43.93 million persons as of the year 2013. The unemployment rate was established to stand at 4.8 % as of January 2015. The Germany population stands at 80.6 million people of the current statistics of the year 2013. Every country`s economic well being s measured by the real gross domestic product per capita. As of the year 2013, the real gross domestic product per capita of Germany was accurately established to be $ 38,292. This particular value was equivalent to at least 303% of the world`s general average real gross domestic product per capita. The GDP per capita is normally obtained by diving a country`s gross domestic product by the total population of a specific country. The Gini index ratio also referred to as the Gini coefficient is defined as the measure of the statistical dispersion. The Gini index ratio represents the distribution of a nation`s citizens. This particular value of ratio measures the inequality among the values of distribution frequency. A Gini index ratio or coefficient of zero clearly expresses a perfect equality where all the particulate values are the same. A Gini index ratio of one expresses or denotes a maximal inequality among the considerate values. To note is that if the Gini index ration exceeds the value of one, it means that some persons under consideration represent negative contribution to the total value. This index ratio outlines the measure of inequality if income or wealth. As of the year 2013, the Gini index ratio of Germany was 0.283 while that of the United States of America (USA) was 0.408, a difference exists between the two indexes. In Germany, there is better equality when compared to the United States of America where equality among the considered values is to a lesser extent. The Republic of Germany possesses several natural resources such as metal deposits. It is these natural resources that have kept the socialist economy on the right channel of economic development. Natural resources found in Germany include; the bituminous and lignite coal, natural gas, iron ore, copper ores, nickel ores, radioactive materials such as uranium, salt, the potash, construction materials and generally the usual farmland. Germany possesses relatively few domestic natural resources when compared to its ever growing domestic demands. This particular country therefore imports most of its raw materials for its industries at home mostly from the African continent that is very rich in the natural resources. Germany`s energy sector is essentially fair due to the occurrence of coal and the natural gas within its borders. Regardless of this, the nation imports crude oil and other petroleum products since a large part of its industries relies on the fossil fossils. Motor vehicle and other heavy machineries spread across the country are the largest consumers of the fossil’s fuels such as the petroleum products. Germany`s farmland that is very fertile produces products such as poultry, beef, wheat, barley, cabbage and milk among other major products. In Germany there exist seven key industries that have kept the economy moving. These seven industries have played a major role in the setting of the global agenda and the economic cooperation across the globe. These key sectors under consideration are the; Health sector- Health care and the medicinal sector which also includes sub-sector the likes of the medical engineering. Automobile world- Germany is the home to the manufacturers of vehicle brands going by the name Mercedes and the Volkswagen among others. The pharmaceuticals and chemicals sector- Multinational companies such as the Bayer and the BASF have their roots back to Germany. They operate across all the continents of the world meaning that they their home country huge profits. The Gene and the Biotech technologies field- Germany is one of the world`s leading researcher in the biotechnology field meaning that what they patent can only be obtained by another party for commercial use after paying large sums of money. Technology and the innovation sectors, this includes the 21st century innovations such as the nanotechnology. These kinds of innovations are normally patented by their researchers and those companies that want to utilize them are usually required to some money. The financial services sector- This particular sector has been established to account for around 70% of Germany`s annual nominal GDP value. This means that this sector is extensively invested in and employs a large percentage of the Germany`s population. The energy sector-Natural deposits of coal and natural gas within the borders of Germany have played a key role in the national development. These two resources have been exploited and they have been established to save the nation a lot of capita had they been imported into country. They are also available in the country at a cheaper cost. The German currency that is in use is referred to as the Euro. One Euro is equivalent to 1.1199 dollars. This specific currency began its use in the year 2002. This type of currency came into use after the abolishment of the Deutschemark which had assumed its use in the year 1948. It was abolished in the year 2002. The debt to GDP ratio of the German state was established to be 76.9% of the nations annual Gross Domestic Product (GDP). For the period of 1995 to 2013, this particular debt to GDP ratio consideration averaged to an approximate value of 66.26% the highest debt to GDP ratio was 80.3% and was experienced in the year 2010. During this period, there was economic recession and it affected major world economies including that of Germany. In the year 1995, the debt to GDP ratio was lowest and was recorded as 55.6%. The debt is usually the national government debt. When this debt is expressed as a percentage of the Gross Domestic Product, then the investors have an opportunity to measure a country`s ability to make future payments on its debts and so they choose if to invest in those countries. This particular ratio usually affect a country`s borrowing costs and the national governments bond yields. During the period of year 2007 to 2013, the world generally experienced the global recession. Economic difficulties were experienced in many nations across the world. Germany is one of the countries that underwent economic difficulties during this period of time. At this particular period, Germany`s exports fell by 5.8% in August 2009. This fall in experts translated to the shrinking of the German economy by around 0.2% while also the imports into country were established to have fallen by 1.3% hence translating a loss of 75.1 billion British pounds. Recession resulted as a result of the sanctions between the Europe and the Russia parties. In the same year, 2009, the industrial production in Germany also fell by 4% in the month of August. During this particular period of economic difficulty in the world, unemployment rates grew up due to slowly shrinking economy as some researchers would state rather than recession. However through application of dynamic high standard measures, the German economy recovered from recession and as of the year 2011, the economy had already recovered and the previous high rates of unemployment fell down to normal levels of between 4 to 5%. Exports from the country rose up and lead to the creation of trade surplus. Figure 4: The unemployment rates in Germany The rates were highest the year2006 though the rates of unemployment are going down due to improved economy of the country. Figure 5: Germany`s Inflation rates The figure essentially shows the country`s inflation rates for the years 2003 to 2015 with inflation being greatest during the period of global recession. Figure 6: Germany`s Annual GDP per Capita The graph shows the annual GDP per capita of the citizens for the period of time that ranges from 2004 to 2014. GDP per capita is always increasing from 2011 to 2015. Figure 7: German Government Budget Spending This figure particularly informs us about how the government spends the revenue that is as a result of taxes upon goods, services and from other sources. Figure 8: Value of Germany`s exports This particular graph of interest shows the value of Germany’s international trade with other countries. Its shows the value of exports from Germany`s to other countries which are always increasing. Figure 9: value of Germany`s Real Gross Domestic Product This is the particulate element that informs us about annual values of RDGP for the period that ranges from 2004 to 2014. RGDP is increasing over the years. Figure 10: Rates of Poverty in Germany This figure shows us the rates of poverty in Germany from the year 2004 to the year 2010. The poverty rates are increasing due to economy recession at this period. After analyzing Germany, it was established that Germany is number three exporter of goods and services across the world. This means that it earns a lot of foreign income. It is also the largest economy in Europe and that it will remain to command the economy of the European continent due to its favorable trade policies which not only favor big sized investments but also small and medium sized investments. Its annual GDP per capital is one of the highest in the world. References CIA World Factbook Smyser, W R. The Economy of United Germany: Colossus at the Crossroads. New York: St. Martin's, 1992. Print. Kitchen, Martin. The Political Economy of Germany, 1815-1914. London: Croom Helm, 1978. Print. Leaman, Jeremy. The Political Economy of Germany Under Chancellors Kohl and Schröder: Decline of the German Model?New York: Berghahn Books, 2009. Print. Trading Economics, http://www.tradingeconomics.com/ www.transparency.org/ World Bank – World Development Indicators, http://www.worldbank.org/ Read More