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Yes but one of the main reasons it is so competitive is that it benefits from an unnaturally low exchange rate. If germany still had the deutschmark it would tr

Yes but one of the main reasons it is so competitive is that it benefits from an unnaturally low exchange rate. If germany still had the deutschmark it would trade at a much higher level, making the economy less competitive. The european central bank has kept the interest rate low for a long time, benefiting mainly the german economy. Other smaller european economies were left with interest rates that were much to low. This resulted in a flood of cheap credit, leading for exmaple to a housing boom and subsequent bust in Spain/Ireland.

heresy 16y ago
Proof? In its years of existence the German Mark never reached parity with the US dollar. On the contrary, switching to the stronger Euro made Germany's exports less competitive, not more, outside of the EU.
- whakojacko 16y ago
  Not quite a fair comparison, as the DEM was exchanged to be ~0.5 EUR when the Euro was first introduced. Thus the DEM reaching US parity would have been equivalent to 1EUR being 2USD, which has yet to happen.
lispm 16y ago
West Germany was competitive with the Deutsche Mark before. It ran trade surpluses then, too. Many German goods are not competing based on price. A luxury car like BMW, Mercedes, Porsche and others doesn't compete (much) on price. Many smaller companies also are market leader not on price, but on service and product quality. China buys German machines and tools not because they are cheap. The US bought offshore wind turbines from Siemens for the Cape Cod wind farm not because they are competitive on price, but because they are the best available turbines for offshore wind farms. For much of the German export industry it makes no difference where they export. If the Euro makes it easy, then many exports go to Eurozone countries. If not then more exports go to other countries outside the Euro zone. The Euro was overvalued in the last year - with the Euro going down, exports to other countries will strengthen.

heresy 16y ago

Proof? In its years of existence the German Mark never reached parity with the US dollar. On the contrary, switching to the stronger Euro made Germany's exports less competitive, not more, outside of the EU.

whakojacko 16y ago
Not quite a fair comparison, as the DEM was exchanged to be ~0.5 EUR when the Euro was first introduced. Thus the DEM reaching US parity would have been equivalent to 1EUR being 2USD, which has yet to happen.

lispm 16y ago

West Germany was competitive with the Deutsche Mark before. It ran trade surpluses then, too. Many German goods are not competing based on price. A luxury car like BMW, Mercedes, Porsche and others doesn't compete (much) on price. Many smaller companies also are market leader not on price, but on service and product quality. China buys German machines and tools not because they are cheap. The US bought offshore wind turbines from Siemens for the Cape Cod wind farm not because they are competitive on price, but because they are the best available turbines for offshore wind farms. For much of the German export industry it makes no difference where they export. If the Euro makes it easy, then many exports go to Eurozone countries. If not then more exports go to other countries outside the Euro zone. The Euro was overvalued in the last year - with the Euro going down, exports to other countries will strengthen.