Sunday, February 26, 2012

Why Follow Modell Deutschland?

Simon Tilford compares the French and German economies (h/t Arun Kapil):

France actually has a decent economic record relative to Germany’s. Between 1992 and 2001, France managed annual GDP growth of 2.1 per cent compared to Germany’s 1.6 per cent. Over the subsequent ten years – 2002 to 2011 – both countries grew by (an admittedly poor) 1.1 per cent per year. Although the German economy performed better in 2010 and 2011 than its French counterpart, the two countries’ growth prospects are very similar, at least according to the European Commission, the IMF and the OECD. All three forecast growth of around 0.5 per cent in 2013 and 1.5 per cent in 2013. Perhaps the best measure of economic performance is productivity. Productivity per French worker is somewhat higher than in Germany, while productivity growth averaged 0.7 per year in both countries between 2002 and 2011.


bernard said...

These comparisons are quite misleading, for those who don't quite realize the context.

Throughout the 1990's, Germany concentrated inwards, The Western Laender effecting a transfer of DEM 100 billion per year throughout the period towards the Eastern Laender. And in fact, the German current account moved by 100 billion DEM in the very early 1990s. By the end of the 1990s, the reconstruction of the Eastern Laender was mostly over and that is when Schroeder and his successor could reorient Germany outwards.

So the superior growth performance of France in the 1990s was hardly surprising and in fact, was predictable and predicted: France, being the first commercial partner of Germany, benefited of course from Germany's inward concentration and imports.

As for the GDP growth rates ahead, it would be essential to keep in mind the labor force demographic trends going forward: Germany very negative, France not so much. If the two economies were to behave similarly, one would have to expect a higher growth rate for GDP in France than in Germany. Accounting for growth, anyone?

FrédéricLN said...

"both countries grew by (an admittedly poor) 1.1 per cent per year." Yes, the growth per capita is therefore significantly higher in Germany, as bernard puts it.