From 1990 to 2006, the Japanese and Germans had the same effective purchasing power on average.
In 2021, the average German was over 1/3 better off than their Japanese peers.
Contrast that with Poland, which also grew by leaps and bounds – from 1/3 of Germans’ average purchasing power in 1990 to about 2/3s now .
But a gap remained, mainly because Germany also grew considerably, while Japan did not (or hardly).
As a result of these trends, Germany’s economy may well overtake that of Japan in size towards the end of this decade 📈
First in nominal GDP – subject also to currency exchange rates – where the German economy is already 90% the size of Japan’s;
And bit later also measured in PPP, where it stands at 85% (compared to 75% in 1990).
In general, there’s lots of countries that Germany has outgrown in the last three decades – many of which also ought to grow faster to catch up, but have actually fallen further behind.
Quite remarkable if one knows the German discourse which hardly ever tires of jeremiads about industrial decline and the fall of a superstar and whatnot.
The opposite is the case. The superstar is still ascending.
And yes, sure, there are also countries that have grown faster per capita – but overall, surprisingly few and most of them under very specific conditions, usually catching up and still with a significant gap.
And then there’s the US, of course – but even there, the gap has held steady overall (and is mainly due to different working hours, btw).
Wonder where Austria 🇦🇹 fits into all of this?
I used Germany so far because as a big industrial country, it’s more representative for global comparisons.
But for what it’s worth, Austria has been doing just as well as Germany – or even a tiny little bit better, with some small fluctuations 😉
Anyway, follow me for more #funwithstats #economics #statistics or #macro takes.
If you’re into nerdy graphs in global context (who isn’t, right 😜?), I’m your guy 😎
@benbawan The "muh industrial decline" trolls are fixating on the one part of the German economy - unusually high share of heavy industry in GDP and employment - that is most like that of Italy.
@Alon True, but even t here they miss the forest for the trees. Germany’s industrial prowess and employments has been astonishingly resilient (some would even say, too resilient – some production probably ought to move). Manufacturing share going down is normal and, to some degree, even healthy.
@Alon Would be pretty weird if you needed the same number of people to produce the same number of cars after 30 years of R&D and capital investment. We wouldn’t want that, would we?
@Alon For what it’s worth, manufacturing as a share of value added in GDP has barely budged in Germany in over two decades (!) – and in the years before that, it also mainly dropped due to Eastern German industries being wound down.
@Alon But the share itself doesn’t tell you much, it’s a mirage. It has also been relatively stable in Japan and even in Italy, it hasn’t fallen by that much lately – yet all these countries have had wildly different growth profiles overall.
@benbawan but the Japanese have WAY better cuisine than the Germans 😅🍜
@chri_gru Indeed – but who doesn’t, really 😜
In the same period, the average purchasing power of South Koreans went from less than 1/2 of that of the Japanese to +10% more last year.