Germany and Italy: From 'Economic Miracle' to Global Crisis (Problems and Factors of Growth)

Abstract

In the last six decades, Germany went through essentially two main phases of economic development: an extraordinarily rapid growth in the 1950s, the so-called German “economic miracle”, and then a gradual deceleration of development which implies near zero growth rates in our days. According to the empirical results, in the earlier rapid economic development a great role was played by the increase in labour force and fixed capital, as well as the impact of post-war reconstruction. The causes of the later slowdown to a very significant extent lie with the exchange rate policy and in the fact that since the German reunification no growth-oriented economic policy has been implemented. The foreign-trade model expounded in the paper gives an explanation of manufacturing growth taking exchange rates and terms of trade into consideration. Another function concretises the latter’s role with respect to macroeconomic growth. Factors determining economic growth from the supply side are analysed not only globally, but also at the level of manufacturing industry, the pulling sector of modern economy. In this connection, the author describes and uses an endogenous growth model (general model) elaborated and verified by a worldwide econometric investigation on 131 countries that considers not only physical and human capital, but also time as the event space of creative economic activity. In that model, the main components of economic growth mechanism are the intensity functions mapping three fundamental types of technical progress from the initial state without physical capital to the information society of our days. In addition to the role of growth factors in a narrow sense, the model in point makes it possible to evaluate the economic impact of other causes acting outside the mechanism of technical progress.