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INTL 271 - The First Report-World Economies - Group Scho
INTL 271 - The First Report-World Economies - Group Scho
International Business
Chapter: World Economies
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Table of Contents
GERMANY .................................................................................................................................... 3
I. Overview ................................................................................................................................. 3
II. Human development .............................................................................................................. 4
III. Economic Indicators ............................................................................................................. 4
IV. Germany’s Economy ............................................................................................................ 5
V. Infrastructure Facilities .......................................................................................................... 7
1. Means of transportation ...................................................................................................... 7
2. Mobile & internet usage...................................................................................................... 8
VI. Legal regime ......................................................................................................................... 8
1. Political system ................................................................................................................... 8
2. Corruption ........................................................................................................................... 8
3. Country risk ........................................................................................................................ 8
VII. Other factors ........................................................................................................................ 9
1. Ease of doing business ........................................................................................................ 9
2. Competitiveness .................................................................................................................. 9
France ............................................................................................................................................ 11
I. Overview ............................................................................................................................... 11
II. Human Development............................................................................................................ 12
III. Economic indicators............................................................................................................ 12
IV: France’s economy ............................................................................................................... 14
V. Infrastructure Facilities ........................................................................................................ 18
1. Means of transportation .................................................................................................... 18
2. Mobile & internet usage.................................................................................................... 19
VI: Legal Regime ...................................................................................................................... 21
1. Political system ................................................................................................................. 21
2. Corruption ......................................................................................................................... 21
3. Country Risk ..................................................................................................................... 21
VII: Other Factors ..................................................................................................................... 22
1. Easy of doing business ...................................................................................................... 22
2. Global Competitiveness .................................................................................................... 23
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GERMANY
I. Overview
►Territory size
The total territory size in Germany is 357,022 km2 which contains 348,672km2 of land and
8,350km2 of water. Germany has the land border in total 3,714 km and has the same border with
“Austria 801 km, Belgium 133 km, Czech Republic 704 km, Denmark 140 km, France 418 km,
Luxembourg 128 km, Netherlands 575 km, Poland 467 km and Switzerland 348 km; and 2,389
km of coastline” (CIA, n.d.).
► Population
In 2019, the population of Germany is 83.02 million people, which is the largest number of
people in EU (UN, n.d.). They fairly distribute throughout most of the country.
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II. Human development
Germany’s HDI value for 2019 is 0. 939 – which put the country in the very high human
development category – positioning it at 4 out of 189 countries and territories (UN, n.d.). The
expected years of schooling is 17.1 years, mean years of schooling is 14.1 years in 2019 and
Germany literacy rate was 0%. Life expectancy at birth of German is 81,2 years, meanwhile
male is 78,7 years and female is 83,6 years (CIA, n.d.). GNI per capita, PPP was $46,946 in 2019
(WB, n.d.). Until now, all population of Germany can access to fresh water, no one used
unimproved water, sanitation facility access has also improved to 99,3% in urban areas and 99%
in rural areas (CIA, n.d.)
In 2019, The GNI in total was $4,058 trillion, while GNI per capita of Germany was $41,467,
which was increased approximately $10,000 compared to 2010. GNI per capita Atlas method
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was $47,110, it is belong to high-income country by World Bank Classification and GNI per
capita, PPP was $55,980 (WB, n.d.).
Germany is the developed country in the world, it belongs to European Union in Europe
(UN, n.d.). Germany is the Germany is the largest economy in Europe and the fourth largest
economy in the world.
Source: https://www.statista.com/statistics/295519/germany-share-of-economic-sectors-in-gross-domestic-product
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►Key Industries:
Germany has the strong economy because of its highly developed industries which include 3
main industries: automotive, machinery-equipment, chemical industry (Main industries, 2020).
Besides that, there are some other important industries such as Aerospace, Micro-technology,
Energy and Building industry.
(1) The automotive industry is the largest industry in Germany which generated for over EUR
435.3 Billion in revenue 2019 and accounted for 20% of total domestic industry revenue (The
Automotive, 2019). In the world market, Germany is the largest premium car production (36%).
Their main competitors are China and USA. (Max, 2020).
Source: https://www.gtai.de/gtai-en/invest/industries/mobility/automotive/automotive-industry-2800
(2) Machinery-equipment industry is the second largest and number 1 domestic industry sector
by level and degree of innovation which accounted for 3.5% of German economic gross value
added (The Machinery, 2020). Germany is the world’s leading supplier of machinery with 16%
share of global trade and “German manufacturers are also the world leaders in 19 out of 31 M&E
sectors in global comparison.” (The Machinery, 2020).
(3) Chemical Industry: Germany is the European leader in chemical sales and exports
accounted for 70% of the European export market. In the world marketplace, Germany is the
second largest exporter and the third behind China and USA in chemical sales (Germany's
Chemical, 2020).
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Source: https://www.gtai.de/resource/blob/64542/121894962e5bfeb883a79d3ec6ae44d7/industry-overview-
chemical-industry-in-germany-en-data.pdf
V. Infrastructure Facilities
1. Means of transportation
The means of transportation in Germany include public transport (buses and trams), rail
transport, air transport, and cars. Among these, cars are the most favorable one. Germany is
famous for various carmakers including Audi, Mercedes, BMW, and Volkswagen. Up to 2018,
there were 47.095.784 passenger cars in Germany, according to Eurostat (Passenger cars, 2020).
This number increased by more than 3.6 million in the following year (Number, 2020).
German using cars mostly for their commuting and holidays indicates the significant total
movement (in kilometers) that passengers use within a year. Specifically, in 2017, a passenger
travelled nearly 1.2 million kilometers by car while that was just 95.5 thousand kilometers by rail
(OECD, n.d.).
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2. Mobile & internet usage
There were about 45.5 million mobile users in Germany in the year 2018 (The World, n.d.).
Along with telephone subscriptions, nearly 95% of German households had access to the internet
in 2019 which explains the high demand for information and communication in this country.
In 2018, about 80% of German owned portable computers were used both at home and in the
workplace or when German was away from these places (Digital economy, 2019).
1. Political system
Germany is a federal parliamentary democracy that has a strong political system. The President,
Frank-Walter, who is the head of the state, will represent Germany in and out of the country.
Meanwhile, The Federal Chancellor, Angela Merkel, who is the head of the government, will be
responsible for regulating the nation's policies (Fact, 2015). The political parties include
Christian Democratic Union (CDU), Christian Social Union (CSU), Social Democrats (SPD),
Alternative for Germany (AfD), Free Democrats (FDP), The Greens and The Left (Political
parties, 2020.). Among parties, SPD is the biggest one, receiving 39% of the vote (Oltheman,
2020).
2. Corruption
In terms of corruption, Germany is recorded to rank 9 within 180 countries and scored 80 over
100 points by Transparency International in 2019 (Transperancy, n.d.). The data reveals that
doing business in Germany companies will hardly deal with bribery or other corrupt activities.
Thus, the country is deserved for foreign investment.
3. Country risk
However, the country does face some risks yet at a slight level regarding the economy, politics,
and finance. From an economical perspective, Germany underwent a 0.4% growth rate in 2017
and had a low unemployment rate (3.4% in 2019). The growth rate is expected to be stable in the
following years according to the graph below.
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As stated above, the political risks were not high in Germany which in turn leads to an efficient
business environment. Financial risk causes Germany to have low profitability (low interest
rate). Despite risks, GDP per capita of Germany was relatively high, approximately 50 thousand
dollars, compared to other developed countries such as France and Italy (Best, 2019).
2. Competitiveness
Competitiveness Index (GCI) refers to “the level of productivity of a country, conditions of
public institutions, and technical conditions” (The Global, n.d.). In 2019, Germany ranked 7th
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over 141 countries in GCI. Among 12 factors determined GCI, such as institution, infrastructure,
ICT adoption, skills,...Germany scored 100 leading the first place in macroeconomic stability
and the country also ranked high in the health sector (92/100) (World, 2019).
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France
I. Overview
►Territory size
The total territory size in France is 643,801 km2 which contains 640,427 km2 of land and 3,374
km2 of water.
France has the total boarder is 4,176 km and France has the same boarder with many countries
such as “Andorra 55 km, Belgium 556 km, Germany 418 km, Italy 476 km, Luxembourg 69 km,
Monaco 6 km, Spain 646 km and Switzerland 525 km” (CIA, n.d.)
► Population:
In 2019 the total population of France is 66,99 million people which accounted for 0.84% total
amount of world population (UN, n.d.). The population distribution is not balance, because
80.44% population live on the metropolitan areas like Paris and Lyon and French tend to live in
the Southeast and North of the country (CIA, n.d.)
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II. Human Development
The France’s HDI in 2019 was 0,891 and it accounted in the 26 rank in the world, The life
expectancy is 82,2 years in total population, meanwhile male is 79,2 years and female is 85,4
years. The expected schooling years of French is 15.5 years (UNHD, n.d.). Moreover half of
French people now live on an income of more than €20,820 per year - a 0.4% rise compared to
last year (Living standards, 2019).
According to the research of the World Bank, France has many positive rations that help France
become one of the biggest economy in not only Europe but also the world, such as GNI was
2.046 trillion USD in 2018, GNI per capita, Atlas method in 2018 was 41.090 USD, and the GNI
per capita PPP of France in 2018 was 47,490 USD (The World Bank, n.d.).
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Nowadays, France is one of the high-income countries in the world according to World Bank
classification and this country is the role model of European nations. Moreover, France plays an
important role in many organizations such as NATO, G7, G20 and so on.
France was in the top ten of the world's GDP ranking all over the world in 2019. Compared to
Germany which was in fourth place, France ranked at the seventh place. (Project GDP Ranking,
2020).
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Source: https://www.ig.com/us/news-and-trade-ideas/top-10-largest-economies-in-the-world-190819
Source: http://m.hktdc.com/business-news/article/Developed-Markets-Western-Europe/France-Market-
Profile/mp/en/1/1X4JR29L/1X0AA4DB.htm
It can be obviously seen that service is the biggest contributor to GDP in France.
export are one of the deciding careers in service.
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Source: http://m.hktdc.com/business-news/article/Developed-Markets-Western-Europe/France-Market-
Profile/mp/en/1/1X4JR29L/1X0AA4DB.htm
In France, the majority of export and import products concentrate on machinery and complex
manufactured goods (44,2% export and 39,8% of import) used for producing transport,
electricity and household applications. The following goods are well-known for import and
export is chemical and food or agricultural products and, respectively. Beside, France transfers
manufacturer consumer goods, metals and articles thereof as well. (France: Market Profile, 2020)
Source: http://m.hktdc.com/business-news/article/Developed-Markets-Western-Europe/France-Market-
Profile/mp/en/1/1X4JR29L/1X0AA4DB.htm
Primarily, the country has focused on importing and exporting around Europe and the other
regions such as the United States and China. The country, which was 14,7% of export and 19,9%
of import, was Germany. (France: Market Profile, 2020)
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Regarding agriculture, the majority of products related to wheal, cereal, wine grapes, and potato.
The amount of agriculture goods primarily provides for the domestics market and exporting into
the other nations.
France GDP From Agriculture
Source: https://tradingeconomics.com/france/gdp-from-agriculture
The French agriculture contributing to GDP decreased from 8234 EUR million in the fourth
quarter of 2019 to 8152 EUR million in the first quarter of 2020.
The final contributor is the industry which concentrates on manufacturing related to chemicals,
automobiles and food.
France GDP From Manufacturing
Source: https://tradingeconomics.com/france/gdp-from-manufacturing
GDP From Manufacturing in France decreased to 53489 EUR million in the first quarter of 2020
from 56899 EUR million in the fourth quarter of 2019.
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►Key Industry
(1) Automotive industry:
“Manufacturing is among the largest industries in France, accounting for billions of dollars in the
country’s GDP. The country is recognized as the fourth largest automobile manufacturer in the
world and is home to two of the largest automobile manufacturers in the world: Peugeot and
Renault.” (Benjamin, E. S., 2017) Besides that contributing in the GDP, automobile
manufacturing has created a large number of French citizens.
Number of people working in the automotive industry in France from 2013 to 2016 (in 1,000s)
Source: https://www.statista.com/statistics/789151/workforce-automotive-sector-france/
The workforce generally increased, reaching nearly 220,000 for the year 2016.
(2) Chemicals industry:
The French chemical industry is on the top ten of exporting chemicals all over the world which is
the fifth place, 3.3%, following China, USA, Japan and Germany.
Source: https://www.chemistryviews.org/details/ezine/2098119/German_Chemistry_Success.html
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In France, there is a wide range of products including organic chemicals; specialty chemicals;
soaps, detergents, and perfumes; inorganic chemicals and fine chemicals (for pharmaceuticals.
The French organic chemicals is the largest the number of products at 35.4% in terms of Basic
organic chemicals, plastics, rubber
Source: https://www.aiche.org/resources/publications/cep/2015/december/frances-chemicals-industry-rooted-
tradition
V. Infrastructure Facilities
1. Means of transportation
France boasts perhaps the world’s best infrastructure, and it’s a bargain. Regarding the means of
transportation such as: buses, the Metro, and the RER train system… All of them are likely
cheaper than comparable services in the developed countries. (France Infrastructure, n.d)
In France we have:
- Advancement in technology in transportation.
- All modes of transport are available, travelling by air, land, rail, and rivers too, with
relative ease and comfort.
- Some of the world’s fastest trains.
- “The rail system is operated by a state-owned company – French National Railways. In
total, the country has 19,486 (31939) miles of rail lines. All the roads, measuring about
514,065 miles, are paved. It is worth mentioning that approximately 47 percent of
France’s waterways are under heavy utilization. In total, the country has a whopping 474
airports, and the majority of them serve international traffic.”
Metro
One metro ticket will cost you €1.90. You may use it for one journey and the connections too,
available on both the ticket machines, offices, and metro stations.
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The RER System
Tickets and price in RER are the same as those of Metro, limited in city zone. The RER stations
have their ticket machines and offices. A n RER ticket takes care of journeys and all the
connections within Paris.
Bus
Transport is free for children aged below four years. Kids between four and eleven years pay half
the price. If you intend to live in France.
Source: https://www.gihub.org/our-tools/
Car
Car brands ranked by number of owners in France in 2018(in million)
Source: https://www.statista.com/statistics/467177/forecast-of-smartphone-users-in-france/gy
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Internet user numbers in France from 2017 to 2020(in million users)
Source:https://www.statista.com/statistics/566947/predicted-number-of-internet-users-in-france
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VI: Legal Regime
1. Political system
President: Emmanuel Macron
The Fifth Republic was established in 1958, it gives relatively extensive powers to the executive
(President and Ministers) compared to other western democracies.
The executive branch:
According to the French political system: The head of state and head of the executive is the
President, carries more power than leaders of most other European countries, where the two
functions are separate (for example in the UK, the Monarch and the Prime minister, in Germany
the President and the Chancellor).
2. Corruption
“Corruption is a low risk for business operating or planning to invest in France. The country’s
investment climate is very favorable, and there exists a strong legal framework to counter
corruption. Corruption is perceived to be a problem in public procurement and whenever
business and politics overlap” (France Corruption Report, 2017)
Source: https://tradingeconomics.com/france/corruption-rank
3. Country Risk
France faces structural challenges: high structural unemployment, weak competitiveness, and
high public and private debt burdens. High unemployment rates, especially among youth, remain
a growing concern for policymakers.
This trend to be heavily affected by the negative economic impact of the COVID-19 pandemic,
the rate being currently estimated to increase to 10.4% in 2020 and should remain stable in 2021.
Social mobility remains low and the employment rates of many disadvantaged groups are poor.
(The French political system, n.d)
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VII: Other Factors
Source: https://tradingeconomics.com/france/ease-of-doing-business
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2. Global Competitiveness
Global Competitiveness Index (GCI) refers to “the level of productivity of a country, conditions
of public institutions, and technical conditions” (The Global, n.d.). In 2019, France ranked 15th
over 141 countries in GCI with the overall score is 79 (The Global, 2019)
Source: http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf
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