Comparison of Economic Growth between The Netherlands and Germany

Pages: 7 (2144 words) Published: May 18, 2010
Comparison of Economic Growth between The Netherlands and Germany (1978-2009)


About 16 years ago, when European Community became European Union(hereinafter to be referred as EU) , the Netherlands and Germany, as two founding members of the EU, have been played an important role in European and world's economy.

When talked about Dutch economy, East indies company must be a start. As the first company in the world, it helped the Netherlands to be the leader of world's economy seventeenth century and to build Dutch entrepreneurship. The capital city of the Netherlands, Amsterdam, use to be the financial and business centre of the world. Later, Dutch economy has seen by many declined for a while. But, since 1980s, dutch government has reduced intervention, dutch economy become more prosperous and open again. To the east of the Netherlands, Germany stands in the central europe, as the largest national economy in Europe, ranked fourth by nominal GDP and fifth by GDP (PPP) in the world in 2008. After the industrialization, this country has become a driver and innovator in global economy. Especially when west and east Germany unified in 1990, the country's economy went out from the recession after second war's big hit. Compared these two countries' economic development, there are a lot similarities and differences due to its close position in Europe continent, culture background, and even history. This paper is organized as follow. Section 2 introduces briefly the concepts of economic growth and the key concepts in measuring economic development, section 3 explains how rule of law effect economic development in the Netherlands and Germany, section 4 presents the relationship between income distribution and economic development, section 5 describes cultural influence on economic development, section 6 consists of examples of successful entrepreneurship in the Netherlands and Germany, section 6 deals with the technology factor in economy in the two countries. Section 8 comprises comparison and conclusion.

Section 1
To start with the comparison,we need to define what economic growth is and the key concepts of economic development. At first, the economic growth we are going to study is long-run economic growth. Long-run economic growth is the growth of what an economy is able to produce 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. Economic growth implies increases in per-capita real gross domestic product (GDP), namely widening of the production scale in a country as a whole, or more efficient use of its economic resources to produce goods and services(Kibritcioglu&Dibooglu, 2001).Real GDP is the value of final goods and services produced in a given year when valued at constant prices. It is the best measure of total 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 measure the change in the quantity of production (Parkin, 2008, pp. 491).

1.2 figures in the Netherlands and Germany

Figure 1: GDP growth in percentage in the Netherlands and Germany(1978-2007) [pic]
Source: WDI(world development indicators) online 2007, the World Bank Group

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 figure 2 show the annual GDP growth and GDP per capita growth in percentage in the Netherlands and Germany from 1978 to 2007. As in figure 1 and figure 2, from 1978 to 1982, the Netherlands and Germany both 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...
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