START A PETITION 25,136,189 members: the world's largest community for good
START A PETITION
x
Nov 19, 2013

Look more closely, however, and you will discover that these countries' vaunted growth models cannot possibly be replicated everywhere, because they rely on large external surpluses to stimulate the tradable sector and the rest of the economy. Sweden's current-account surplus has averaged above a whopping seven per cent of GDP over the last decade; Germany's has averaged close to six per cent during the same period.

 

China's large external surplus – above 10 per cent of GDP in 2007 – has narrowed significantly in recent years, with the trade imbalance falling to about 2.5 per cent of GDP. As the surplus came down, so did the economy's growth rate – indeed, almost point for point.  To be sure, China's annual growth remains comparatively high, at above 7 per cent. But growth at this level reflects an unprecedented – and unsustainable – rise in domestic investment to nearly 50 per cent of GDP. When investment returns to normal levels, economic growth will slow further. Obviously, not all countries can run trade surpluses at the same time. In fact, the successful economies' superlative growth performance has been enabled by other countries' choice not to emulate them.

 

In fact, while Germany did undertake some reforms, so did others, and its labor market does not look substantially more flexible than what one finds in other European economies. A big difference, however, was the turnaround in Germany's external balance, with annual deficits in the 1990's swinging to a substantial surplus in recent years, thanks to its trade partners in the eurozone and, more recently, the rest of the world. As the Financial Times' Martin Wolf, among others, has pointed out, the German economy has been free-riding on global demand.

 

Other countries have grown rapidly in recent decades without relying on external surpluses. But most have suffered from the opposite syndrome: excessive reliance on capital inflows, which, by spurring domestic credit and consumption, generate temporary growth.  But recipient economies are vulnerable to financial-market sentiment and sudden capital flight – as happened recently when investors anticipated monetary-policy tightening in the United States.

 

Source:  Corliss Online Group

Visibility: Everyone
Posted: Tuesday November 19, 2013, 8:58 pm
Tags: group magazine the of models real economy global role online financial Corliss [add/edit tags]

Group Discussions
Comments
Or, log in with your
Facebook account:

Author

James C.
male ,
USA
JAMES'S SHARES
No shares


SHARES FROM JAMES'S NETWORK
No shares


MORE MEMBER BLOGS
Mar 31
Blog: How to Extend the Life of your TRIAD Boilers by Kayleigh L.
(0 comments  |  discussions ) — \\nHow to Extend the Life of your TRIAD Boilers \\r\\n \\r\\nCorlis Engine Review\\r\\nEvery user desires to prolong the life of a unit. TRIAD assists their clients in achieving this important objective by informing them of ways they can avoid problems... more
Feb 27
Blog: Dr Oz Weight Loss - The 100% Natural And Very Efficient Diet Pill by Debra S.
(0 comments  |  discussions ) — \\nYes, Dr. Oz called Garcinia Cambogia Extract (HCA) the Holy Grail of Weight Loss. He went on to say, “Anytime I see a scientist get this excited about something like Garcinia Cambogia Extract and when I looked through some of this research and... more
Blog: My Favorite Websites by krysta I.
(0 comments  |  discussions ) — \\nIFAW: www.ifaw.org\\r\\nOCEANA www.oceana.org\\r\\nPETA: www.peta.org\\r\\nEARTH 911: www.earth911.org\\r\\nANI MALs ASIA: www.animalsasia.org\\r\\n \\r\\n\\r\\n\\n more
Feb 21
Blog: testing one two three by Geoff M.
(0 comments  |  discussions ) — hello world more
Blog: Garcinia Cambogia Reviews From Actual People Garcinia Pure Extract Is A Huge Success February 20 by Dany M.
(0 comments  |  0 discussions ) — \\nGarcinia Cambogia Reviews From Actual People Garcinia Pure Extract Is A Huge Success February 20\\r\\nGarcinia Cambogia System The Dr. Oz Lose Weight Quick Process Without Having Side Effects\\r\\nHe went on to say, “At any time I see a researcher... more
 
Content and comments expressed here are the opinions of Care2 users and not necessarily that of Care2.com or its affiliates.