If Germany is export driven how is it able to stay competitive against China et al.

Quote from jem:

One of the best answers I have read. Very nice analysis. I suspect you are correct.

I wonder though... at what point do the weaker states have a de minimis impact on the currency... and have some gotten there.
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I write quite heavily about this kind of stuff in my book, which you can get below for a moderate price or you can borrow it for free through the amazon lending library. Alternatively you can get more information on the Euro Crisis, not as much or as detailed, from my euro crisis page on my blog, which is below the link to my book.

http://www.amazon.co.uk/Aggregate-C...cy-Weakness/dp/1613642075/ref=tmm_pap_title_0

http://morganisteconomics.blogspot.co.uk/p/euro-crisis.html

There are some linked articles below the scribd documents.

My personal view is that the foremer eastern block nations will go into crisis soon and that will change the situation.
 
Europeans negotiated trade agreements that work. Parity, one Euros' worth of export allows one Euros' worth of import. The US of A does these "free market" things left over from the Reagan era and watches as all it's jobs leave the country.
 
Simple answer: less leftover for shareholders. Many German companies, especially those that are niche players and which produce high tech or other hard to imitate stuff are mid-sized, sometimes family owned, companies that do not whore themselves out to financiers (aka. Shareholders) . They pay way above minimum wage even though their employees may not be unionized and produce environmental or automotive related products that are top notch and in high demand yet hard to imitate (many of their products are nowadays copycat detectable through hidden chemical compounds applied to the original. Even in china it's hard for law courts nowadays to through out a suit with clear merits even if it was brought about by a foreign firm) .

Quote from short&naked:

I have been looking for a lucid economic explanation how Germany, which has a manufacturing/export based economy, is able to stay competitive in the global economy while still paying European level wages to its workers?
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Nobody in Germany nor china finances stoves or ovens, people pay cash. It's not the U.S. maybe that is a related issue: the middle class in the US is close to broke. The one in China is working so hard they bend over backward to earn more to buy that fancy oven. the difference now comes in place that nobody in China would want to buy a crappy GE oven or Buick or Cadilac if they can afford Audi, BMW or other German brands. That's the real difference. There are American firms as well which produce superior products but often they produce mass market products that they are forced to price at steep discounts in order for their target consumers to afford them (see msft, food names, and the like).

Quote from zdreg:

there is competition from low wage countries including china itself.
e.g. restaurant kitchen equipment -ovens. a chinese oven costs $3300. the german oven costs $8500. if you want the best you get a german oven which includes longer life, less repairs, more even heating and more accurate temperatures controls. the deal is clinched by the fact that the german co.s, who have access to money at very low rates, will finance the deal with extremely low loan rates.
the differential in costs can then become negligible in time.
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Sorry but I think that has always been a crap argument. Many German products that really make a difference in the trade balance are such that target clientele and markets that would buy the very same product no matter whether eur.usd trades at parity or 1.5. If you look at where the dollar traded against DM before euro came about and how the DM was fixed against Euro you notice that German competitiveness really did not benefit a whole lot from exchange rate differentials. Seriously take a look for yourself before you believe this crap.

Quote from morganist:

Here is the answer I believe.

http://morganisteconomics.blogspot.co.uk/2012/04/eurozone-is-polarised-economic-model.html

Ironically Germany needs the EU to fail for its own success.

It lives off the diminished currency value it creates.
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Quote from hftvol:

Nobody in Germany nor china finances stoves or ovens, people pay cash. It's not the U.S. maybe that is a related issue: the middle class in the US is close to broke. The one in China is working so hard they bend over backward to earn more to buy that fancy oven. the difference now comes in place that nobody in China would want to buy a crappy GE oven or Buick or Cadilac if they can afford Audi, BMW or other German brands. That's the real difference. There are American firms as well which produce superior products but often they produce mass market products that they are forced to price at steep discounts in order for their target consumers to afford them (see msft, food names, and the like).
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Yeah..what you say may be true....but we kicked Germany's Ass in World War II
 
Quote from hftvol:

Sorry but I think that has always been a crap argument. Many German products that really make a difference in the trade balance are such that target clientele and markets that would buy the very same product no matter whether eur.usd trades at parity or 1.5. If you look at where the dollar traded against DM before euro came about and how the DM was fixed against Euro you notice that German competitiveness really did not benefit a whole lot from exchange rate differentials. Seriously take a look for yourself before you believe this crap.
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If the DM was fixed to the Euro then it would not be the same as using the Euro for many reasons. I don't think that is a valid argument.
 
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