Paper Example on Germany Economic Analysis

Demographics

Germany is the most populous country in Europe with a population of 82,343,617 by 2018. It has a population density of 227 per square kilometer and is the largest country in the European Union. It had a population growth rate of 0.22% by 2018 according to ("Germany Population 2018 (Demographics, Maps, Graphs)," 2018). Over the years Germany has been fighting a major population drop because its death rate has been higher than its birth rate since 1970. The distribution population of Germany according to age is as follows: 65 years and above are elderly, 25 to 54 years are prime working age, 15 to 24 years are early working age where 14 years and below are children ("Germany Age structure - Demographics," 2018). The rural population of the country was estimated to be at 24.28% where the urban population was estimated to be at 75.72% in 2017 ("Rural population (% of total population) in Germany," 2018).

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Per Capita Income Levels and Wealth Distribution

In the Better Life Index, Germany performs better in the measure of the well-being of people compared to other countries. Also, is ranked above average regarding skills, education, jobs, income, wealth, work-life balance and much more. As estimated by the Organization for Economic Co-operation and Development(OECD) Germany per capita income is $33,652 a year. Regarding wealth distribution, Germany performs poor due to the increased level of inequality and the existence of a wide gap between the poor and the rich ("OECD Better Life Index," 2018).

Main exports and trading partners. Germany has the biggest export economy in Europe and the third largest in the world. In 2016, Germany had a positive trade balance of $280 million after exporting $1.25 trillion and importing $930 billion. The main exports for Germany include cars, vehicle parts, planes, helicopters, aircraft and human or animal blood. Its top trading partners regarding export and import include USA, France, UK, China and Netherlands ("OEC - Germany (DEU) Exports, Imports, and Trade Partners," 2018).

Business environment: Government attitude towards foreign investment and trends, the ease to do business and trade regulations. The World Bank annual ratings ranked Germany position 20 among 190 economies with ease of doing business. Its strength has enhanced as a result of its powerful industrial network, good infrastructure, proficiency workforce, a secure legal framework, and good social climate. Also, the government has implemented measures focused on encouraging investment by funding the initial investment phase and favorable incentives for investors. Nonetheless, Germany has a high tax rate for both business and individual. Also, its economy is highly dependent on export, and its aging population affects its rate of growth ("Foreign investment in Germany - Santandertrade.com," 2018).

Inflation levels, currency exchange rate and risks of the devaluation of the dollar. Germany has had its highest annual inflation since November 2011 at 2.3 percent in September 2018. Over the past 60 years, Germany has an average inflation rate of 2.39 percent. In comparison to other countries, this inflation is at a minimal level and hence has minor effects on business ("Germany Inflation Rate | 1950-2018 | Data | Chart | Calendar | Forecast," 2018). Euro is the official currency in Germany, but due to issues within the European Union, Euro has decreased significantly, and this could still progress in the future. Thus, the euro might be exposed to the risk of devaluation if the current situations are not addressed.

Education and literacy levels, availability of skilled labor and labor costs. In Germany, compulsory education begins at the age of six and last for about nine years. Their education system consists of several stages starting from elementary to the university. The system allows students to follow a path according to their capability ("Education in Germany," 2017). This allows specialization and perfection in a specific career making it among the countries that have the best education. Germany is also rated as a country with a very low level of illiteracy since most of its people are educated. Consequently, it's a country with a very highly skilled labor force. However, Germany is facing a shortage of skilled workforce national wide, especially in occupations such as engineering, sciences and health sector. This is due to the aging effect and decreased population. In terms of labor cost, Germany employers are among the best well-paying employers in the European Union.

Membership in regional economic and trading blocs. Germany is one of the European Union country that enjoys membership benefits from the economic activities carried out in the region. This allows it purchase and sells its good services between countries that are under the European Union trading bloc without experiencing any tariffs or duties. The European Union was formed in 1957 to enable free trade between the European countries. The Union aims to create a single market for good and services that has no barriers. Also, Germany is a member of World Trade Organization (WTO) that helps in supervision and liberalization of international trade ("Membership of Trading blocs, Trade and Financial Flows," 2018).

Legal system: Protection of intellectual property rights and enforcement of contracts. In Germany, the right of intellectual property is managed and protected by the German Patent and Trade Mark Office. There are strong legal structures and enforcement that ensures that these intellectual properties are well protected. Also, Germany is a member of the World Intellectual Property Organization (WIPO) and other intellectual property protection bodies. However, internet piracy and counterfeits goods is still an issue that the country faces ("Germany - 5-Protection of Property Rights | export.gov," 2018). When it comes to agreements, Germans expose very few chances of disagreements since most of it people like following the procedures and rules laid out. So, be it in personal life, business or politics the practice is followed. Nonetheless, there is a legal system to solve out issues resulting from contracts. Mostly arbitration and litigation are used to solve this issues ("German contract law and business culture," 2018).

Conclusion

In conclusion, there are many advantages to doing or starting a business in Germany. However, there still several challenges that one needs to keep in mind before venturing in any business. Therefore, it is advisable to consider both merits and limitations to make the best decision.

References

Education in Germany. (2017, September 22). Retrieved from https://wenr.wes.org/2016/11/education-in-germany

Foreign investment in Germany - Santandertrade.com. (2018). Retrieved from https://en.portal.santandertrade.com/establish-overseas/germany/foreign-investment

Germany Age structure - Demographics. (2018). Retrieved from https://www.indexmundi.com/germany/age_structure.html

Germany Inflation Rate | 1950-2018 | Data | Chart | Calendar | Forecast. (2018, October 12). Retrieved from https://tradingeconomics.com/germany/inflation-cpi

Germany Population 2018 (Demographics, Maps, Graphs). (2018). Retrieved from http://worldpopulationreview.com/countries/germany-population/

Membership of Trading blocs, Trade and Financial Flows. (2018). Retrieved from https://irelandeconomicsliamb.weebly.com/membership-of-trading-blocs-trade-and-financial-flows.html

OEC - Germany (DEU) Exports, Imports, and Trade Partners. (2018). Retrieved from https://atlas.media.mit.edu/en/profile/country/deu/

Rural population (% of total population) in Germany. (2018). Retrieved from https://tradingeconomics.com/germany/rural-population-percent-of-total-population-wb-data.htmlGerman contract law and business culture. (2018, March 19). Retrieved from https://www.allianceexperts.com/en/knowledge/countries/europe/things-you-should-know-about-contract-law-in-germany/

Germany - 5-Protection of Property Rights | export.gov. (2018). Retrieved from https://www.export.gov/article?id=Germany-Protection-of-Property-Rights