'Comparison of Dutch Economy and German Econmy in Last 30 Years\r'

'Comparison of stinting Growth amidst The Netherlands and Germany (1978-2009) Introduction About 16 years ago, when European Community became European Union(hereinafter to be referred as EU) , the Netherlands and Germany, as both founding members of the EU, be possessed of been played an important role in European and worlds frugality. When talked near Dutch thrift, East indies phoner mustiness be a seize on. As the first company in the world, it helped the Netherlands to be the leader of worlds economy ordinal century and to build Dutch entrepreneurship.\r\nThe capital of the United States city of the Netherlands, Amsterdam, use to be the financial and business concent regularise of the world. Later, Dutch economy has seen by many declined for a while. But, since 1980s, dutch government has fastend intervention, dutch economy snuff it more(prenominal) prosperous and open again. To the eastmost of the Netherlands, Germany stands in the central europe, as the largest national economy in Europe, ranked fourth by noun phrase gross domestic product and fifth by gross domestic product (PPP) in the world in 2008.\r\n by and by the industrialization, this country has become a driver and innovator in spherical economy. Especially when west and east Germany unified in 1990, the countrys economy went out from the recession after atomic rate 16 wars big hit. Compargond these two countries scotchal development, there be a lot similarities and differences due to its close part in Europe continent, nicety background, and even history. This report is organized as follow.\r\n partition 2 introduces soon the concepts of frugal harvest and the place concepts in cadence frugal development, instalment 3 explains how rule of natural law effect stinting development in the Netherlands and Germany, section 4 presents the relationship among income distribution and stintingal development, section 5 describes cultural influence on stinting developmen t, section 6 consists of examples of successful entrepreneurship in the Netherlands and Germany, section 6 call fors with the technology factor in economy in the two countries.\r\nSection 8 comprises comparison and conclusion. Section 1 1. 1 To start with the comparison,we need to define what economic process is and the key concepts of economic development. At first, the economic reaping we be going to study is persistent-run economic fruit. long-term economic development is the harvest-festival of what an economy is adapted to educate given its labour force, knowledge, technology, tools, machines, land. It is not about the growth of what an economy actually produces, that type of economic growth is short-run economic growth.\r\n economical growth implies increases in per-capita real gross domestic product (GDP), namely widening of the production home base in a country as a whole, or more efficient use of its economic resources to produce goods and service(Kibritcioglu, 2 001). Real GDP is the value of final goods and services produced in a given year when valued at unending prices. It is the best measure of essential production and the increase in real GDP is used to measure economic growth, as by comparing the value of the goods and services produced at constant prices we can buoy measure the change in the amount of money of production (Parkin, 2008, pp. 91). 1. 2 imagines in the Netherlands and Germany envision 1: GDP growth in percentage in the Netherlands and Germany(1978-2007) [pic] Source: WDI(world development indicators) online 2007, the human being Bank conference Figure 2: GDP growth per capita in percentage in the Netherlands and Germany(1978- 2007) [pic] Source: WDI(world development indicators) online 2007, the World Bank Group Figure 1 and pattern 2 show the annual GDP growth and GDP per capita growth in percentage in the Netherlands and Germany from 1978 to 2007.\r\nAs in figure 1 and figure 2, from 1978 to 1982, the Netherl ands and Germany both(prenominal) suffered an economics recession, with the annual GDP growth in percentage declining from 2. 33% in 1978 to -1. 21% in 1982 in the Netherlands and 3. 01% in 1978 to -0. 39% in 1982 in Germany. Then the Netherlands and Germany both experienced fluctuations in GDP growth. Especially in 1990, the Netherlands had a frizzy rise from -1. 21% in 1990 to 4. 42% in 1989 and Germany experienced a sharp increase in 1990 from -0. 39% to 5. 26%, which is the highest growth rate for Germany in last 30 year.\r\nAfterwards, it shows a different style between the Netherlands and Germany. The GDP growth declined to 1. 26% in 1993 and raised again till 4. 68% in 1999, while German GDP growth declined to 2. 01% in 1999 steadily. In the next 10 years, Dutch growth rate decreased till 0. 08% again as the lowest rate and then the rate belatedly went up and became steady in recent years. Germany in addition showed the equivalent pattern but the rate is cut than the N etherlands in general. Though the figures, we can see the Netherlands and Germany confound a lot common in GDP growth rate and GDP per capita growth rate.\r\n economic system in these two countries be managely to be steady. Only in some year like 1982, 1990, 1993, 1999, 2002, it showed a sharp rise or decline. So, what happened in these remarkable years? What caused the difference in growth rate between the Netherlands and Germany? In the following sections we pass on discuss four key concepts tie in to economic growth in order to see by these problems. Section 2 2. 1 Economic immunity Economic theory indicates that economic impeccantdom affects incentives, prolific effort, and the effectiveness of resource use(de Haan,2000).\r\nWe start with definition of the economic liberty:â€Å"Individuals have economic independence when (a) airscrew they acquire without the use of force, fraud, or theft is protect from physical invasions by opposites, and (b) they atomic num ber 18 free to use, exchange, or give their shoes to another as long as their actions do not violate the like rights of others”(Gwartney et al. , 1996). Moreover, the key indicators of economic freedom are personalized choice, voluntary exchange coordinated by markets, freedom to enter and compete in markets, and protection of persons and their property from aggression by others (Robert, 2006).\r\nIn this paper, we use the indicators of the Fraser ground. Gwartney et al. (1996) ask 17 measures and rate a high number of countries on each of these measures on a scale of 0â€10, in which zero elbow room that a country is completely unfree and 10 means it is completely free. The measures are in four bounteous areas: Money and inflation; Government operations and regulations; ‘ issuance’’ and discriminatory taxation; and International exchange(de Haan,2000). 2. 2 Figures epitome Figure 3: train and ranking of economic freedom of the Netherlands(1970-2 006) [pic]Source: freetheworld. om 2008, The Fraser Institute Figure 4: take aim and ranking of economic freedom of Germany(1970-2006) [pic] Source: freetheworld. com 2008, The Fraser Institute Though these two figures, we can see the Netherlands and Germany had the same pattern during last 30 years and they both got a high rate, which means they were both free to a large extent in economy. After 1980, the rate in the Netherlands was a petty(a) higher(prenominal) than the rate in Germany, but both are very stable. Compared with the rest of the world, the economy in the Netherlands and Germany are comparatively free. . 3 Results After we anticipate though the GDP growth rate and economic freedom rate, we found there is a relationship between those two figures. More economic freedom fosters economic growth, but that the level of freedom is not related to growth. In other words, our findings suggest that more economic freedom will bring countries more rapidly to their steady prese nt level of economic growthif they are below that level. , but that the level of steady state growth is not affected by the level of economic freedom(de Haan and Sturm, 1994).\r\nAnd always the countries with more economic freedom can achieve higher levels of GDP per capital and grow faster (Lawson & Moor Chair, 2006). So we can say high economic freedom rate do contribute to high GDP growth rate, and steady economic freedom also has a positive effect on economic growth. Section 3(income distribution) 3. 1 income distribution Section 4 (Culture) 4. 1 Culture As Hofstede said the world is exuberant of confrontations between people, groups, and nations who think, feel, and act differently.\r\nAt the same time, these people, groups, and nations, are exposed to common problems that demand cooperation for their solution(2004, p2). Those confrontations and cooperation are called culture. victimization the Hofstedes â€Å"Onion” model to depicts four cultural concepts: symbols champion the most superficial and values the deepest manifestations of culture, with heroes and rituals in between(2004, p6). Economic development will not sojourn at national borders. Globalization also require us to deal with culture differences and all the countries should work more closely than ever. 4. 2 Dimensions of Culture\r\nFive dimensions were oft used to measure culture difference: ability distance(PDI), the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally(Hofstede, 2004, p46); Individualism(IDV), pertains to societies in which the ties between soulfulnesss are loose: everyone is expected to look after himself or herself and his or her immediate family(Hofstede, 2004, p76); Masculinity(MAS): A society is called masculine when emotional gender roles are clearly distinct(Hofstede, 2004, p120); Uncertainty Avoidance(UAI), the extent to which the members of a culture feel threatened by ambiguous or apart(p) situations(Hofstede, 2004, p167); Long-term Orientation(LTO), the fostering of virtues point toward forthcoming rewards, in particular, perseverance and thrift(Hofstede, 2004, p210). Following is the index pull ahead of Germany and the Netherlands, compared with the Worlds average. Figure 5: Culture dimensions index tally of Germany(1967-2001) [pic] neb: The Germanys Index Scores:PDI=35, IDV=67,MAS=66,UAI=65,LTO=31 Sources: from IBM selective information base(1967-2001),except LTO from airplane pilot Chinese Value heap infobase(2005) Figure 6: Culture dimensions index scores of the Netherlands(1967-2001) [pic] assembly line: The Netherlands Index Scores:PDI=38, IDV=80,MAS=14,UAI=53,LTO=44 Sources: from IBM data base(1967-2001),except LTO from original Chinese Value Survey database(2005)\r\nFigure 7: Culture dimensions average index scores of the World(1967-2001) [pic] zero(prenominal)e: The world Average Index Scores:PDI=55, IDV=43,MAS= 50,UAI=64,LTO=45 Sources: from IBM data base(1967-2001), except LTO from original Chinese Value Survey database(2005). According to the figures above, we can see PDI in these two countries are lower than average,which means people in these two countries are more equally do by than the rest of the world. For IDV index, the Netherlands and Germany are both societies with more single attitudes, people there are more independent and look after themselves or their close family members, also, individual pride and respect are more passing held values than worlds average.\r\nWhen talked about uncertainty avoidance, Germany scored a little higher than the Netherlands, which shows its a country will reduce the level of uncertainty by enhancing laws, policies and regulations to avoid unkn admit circumstances. In LTO, the Netherlands scores higher than Germany, which indicates its long-term oriented culture. But compared with the worlds average,the Netherlands and Germany scored more or les s in above four dimensions, except in Masculinity, the Netherlands got a lowest score at 14 among its dimensions which indicates a lower level of differentiation and discrimination between men and women. In Netherlands, women are treated more equally than Germany.\r\nThough every country has its own culture background,economic development will not stop at national borders. Globalization requires us to deal with culture differences and work more closely with other countries than ever. Nuclear warfare, planetary warming, poverty, AIDS, even recent economic recession are all good examples for global cooperation. Section5 (Entrepreneurship) Reference Kibritcioglu, A. and S. Dibooglu, ‘Long-run Economic Growth: An interdisciplinary Approach,’ Office of Research Working Paper No. 01-0121, University of Illinois 2001 (http://www. business. uiuc. edu/Working_Papers/papers/01-0121. pdf ): Parkin, M. (2008). Economics(8th ed). Boston: Pearson Education. J. De Haan and J. -E.\r\n Sturm, On the relationship between economic freedom and economic growth, European ledger of Political Economy 16(2000), pp. 215â€241. Gwartney, J. , Lawson, R. , Block, W. , 1996. Economic Freedom in the World, 1975â€1995. Fraser Institute,Vancouver. Cowell, F. A. , 1999, â€Å"Measurement of Inequality” in Atkinson, A. B. and F. Bourguignon (eds) enchiridion of Income Distribution, North Holland, Amsterdam. Hofstede, G. (2004) Cultures and Organizations: Software of the Mind. New York: McGraw-Hill International. Wealth, Culture, and Corruption Bryan W. Husted and Instituto Tecnologico y de Estudios Journal of International Business Studies, Vol. 30, No. 2 (2nd Qtr. , 1999), pp. 339-359 http://www. jstor. org/stable/155316\r\n'