Germany vs Mexico - Countries Performance Growth – Essay Example

Performance growth Introduction Performance of an economy is the under which the economy has been progressing over the time periods and is used as a basic standard to measure various variables in economic growths. Economist’s uses various measures in measuring the economic performance for instance, use of real outputs to measure the gross domestic product of any country to determine different growth rates.
Germany is an economy based in the Eurozone and a prominent of manufacturing hence one of the leading exporter in the region while Mexico is a country based in the South America that belong to almost a third world country. The GDP of Germany has expanded by 0.4 percent in the first quarter of 2013 while that of Mexico has expanded by 0.18 percent over the same period while the growth rate in Germany is estimated at 2.9 percent annually and that of Mexico at 2.5 percent. The per capita income in Germany is also estimated at approximately 43 billion U.S dollars while that of Mexico is estimated at 10 billion U.S dollars over the same periods of 2012(World economic growth rate, 2012).
Thus the performance of the Germany economy almost triple the economic performance in Mexico and hence its economy is quiet high. The GDP of Germany is almost three times the GDP of Mexico. This high difference is as a result of the fact that in Germany, most of the population are employed as the statistics show that 75% of the people aged between 15-64 years are involved in income generating activities (Heller and Roman, 2008).This increases the incomes to many in Germany leading to rising values in GDP as compared to Mexico where majority of the population are unemployed hence decreasing incomes among residents. Germany economy also exports most of its products making it realize more incomes from international markets increasing its revenue base as compared to Mexico who produces majorly for the local consumption.
The economic growth rate in Germany is at an increasing rate and triples the economic growth rate in Mexico. The high economic growth rate in Germany can be attributed to various factors. The level of infrastructure in Germany is of high standards as investments on roads, communications reduces the cost of production hence the goods are cheap and able to compete in the market as opposed to Mexico. Human capital in Germany is of great quality as their human labor are well trained which increases labor productivity. Thus there is confidence among the laborers to take on complicated production process which improves efficiencies. Technology development is of great quality in Germany than Mexico. Use of appropriate and modern methods in production results in high units produced which are of immense quality. This products are able to rival any good at international market levels leading to high economic growths. (World economic growth rate, 2012).
Economic fluctuations is common in Mexico while that of Germany is relatively stable. The basic factors of trade is not certain, for instance the interest rates are not constant and difficult to determine and are also relatively high. This rates greatly discourages investments due to the inverse relationship between the two. Since the interest rate is fluctuating, the exchange rate also fluctuates and as the rates rises, there is appreciation in the values of the international currencies as to the Mexican currency. This makes the country’s export much cheaper and imports expensive which makes the economy’s product expensive in other markets hence cannot compete in a competitive market. While in Germany their interest rates are low encouraging investments hence high productivity (Risso, Punza and Carrera). Their currency also gains value making imports expensive hence the goods produced are provided with the market locally and internationally making the economy to be stable since they are not much affected by the fluctuations in other areas.
Conclusion.
Germany and Mexico are two different economies with Germany majorly based on industrial products while Mexico’s economy is majorly comprises of the agricultural products hence experience different trade between them. Industrial commodities generates much revenue and are able to compete in various markets as opposed to agricultural products are which are volatile and generates low revenues. As a result Germany income, growth rate is far much better than Mexico. However Mexico is considered as a developing country and do experience numerous economic challenges in attempts to pursue development.
Reference
Heller, J., & Roman, D. (2008). Public Spending and the Economic Growth Rate in the European Union Countries. Olsztyn Economic Journal.
Risso, W. A., Punzo, L. F., & Carrera, E. J. (2013). Economic growth and income distribution in Mexico: A cointegration exercise. Economic Modelling, 35, 708-714.
World Economic Growth Rates: Measured by Real GDP. (2012, November 1). Financial Management,