Germany's role in World Economy

By: Bikal Dhungel

Germany has the Europe’s largest economy since 1900. Many multi-national companies originated here and are still world’s leading exporters. Henkel, a company with its history of chemicals and consumer products like washing detergent powders was founded in 1876. BMW was founded in 1917. All 30 companies listed in the German Stock Exchange ( DAX: Deutsche Aktien Index ) are involved in international operations. Most of them are well known to the world. Companies like Adidas, Daimler, Nivea ( Beiersdorf ), BMW, Lufthansa, DHL, Mercedes Benz, Siemens, Volkswagen, SAP are the symbol of quality for the world, that strengthened the idea of ‘Made in Germany’. Handful of other companies like Porsche, Audi, and Opel etc played a vital role as well. Due to this idea of Quality, Germany established itself as a world leader in export. Large part of its GDP comes from Export. The main trading partners are the countries within the European Union but also the US, Japan, China and India. 

Being the largest economy of Europe, Germany is also the motor that keeps the European Union running. Recently, when most of the southern European countries are struggling due to debt crisis and economic difficulties, the healthy growth of Germany has given them some hope. A large portion of southern European Youths have found Germany an attractive location for employment opportunities because in countries like Greece and Spain, youth unemployment rate is as high as 50%. Due to the freedom of movement within the European Union, the youth mobility in Europe is immense. Six new members of the European Union mainly the Eastern European countries also enjoy this right of movement since May 2011. This caused the even more inflow of people to Germany. Due to this growth and the availability of employment, these youths are being able to help people back home. 

In the international level, the total German Foreign Direct Investment has reached record levels, mainly in China. German investors are discovering China as an attractive destination for investment. Germany is not only an export champion with its total revenue of 1.5 trillion Euros from export, but it also imports the goods worth 1 trillion Euros yearly. Hence, its weight in the world economy is huge. 

This massive involvement in the world economy also makes it vulnerable. Any instability of economy in any part of the world comes at the cost of German economy. The recent recession that started in 2008 caused the decreased demands of German goods worldwide. Consequently, the economy went down by roughly 6%, making it one of the hardest hit countries due to the recession. It is still unclear how long it takes to come back to the level of 2007 but the economy is growing with an accelerating rate. Number of employed people reached the record levels of roughly 42 million ( in its total population of 82 million ) 

Germany is especially famous for its idea of ‘Ordnung’ ( Order  ) and discipline, also in the economic system. It is a member of International Monetary Fund, OECD, World Trade Organization etc and has a big voice in the international decision making process.  The heroes behind this success are not only the Corporations and businesses but also the hard working citizens of Germany are equal shareholders and their efforts are supported by strong political and economical stability.