Sunday, March 4, 2012

French-German Contrast

The Times compares the French and German economies by looking at border towns. The article draws a nice picture of the depressed conditions in Sélestat, but on the whole it's misleading about the relative situations of the French and German economies. The Germans have done relatively well in recent years, and over the past decade particularly, by restraining wages relative to productivity, increasing their competitiveness and boosting their export sector. But in the long run they face a worse demographic problem than France. The Mittelstand--German small and medium enterprise--is indeed a distinctive German strength, but the French economy also has its strong areas; they are different but not inferior. France also has a distinctive advantage in energy costs. I don't have time to develop these arguments here, but I'll post a few graphs that are clearer than the graphs in the article and tell a different story to those who can read them. These show the dependency ratio (over-55 to working-age population), relative GDP, unit labor costs, and unemployment.

1 comment:

Anonymous said...

A point of detail: The dependency ratio you are using is fine, but please could you use instead one including the dependant young people (<20 years ?), not only the over 55 years?
It is the one which matters for demograph/economists studying the timing of the boom related to the demographic dividend -the one generation delay between longer life/less infantile mortality and diminution of natality.
I believe this ratio is the one relevant too for the next transition to a stabilized / not growing anymore population, as we will experiment in Europe in the next decades.

The one you use reeks of private insurances marketeers fearmongering.