Comparison of Economic Systems: Germany and the UAE

Comparison of Economic Systems Germany and the UAEIntroductionEconomy is the aver of a country or region in call of the yield and con nerve centreption of goods and gos, and the supply of money(Oxford Dictionaries 2012).Before profound studying rough the mentioned countries one important aspect should be taken into consideration the likeness betwixt these two countries is their critical role in their region, some(prenominal) of those countries has a significant influence on the political and thrift climate in their respective regions.Germany is located in aboriginal Europe, s discloseh of Denmark, between Poland and the Netherlands. It has a direct approach path to North and Baltic seas. The countrys total atomic number 18a is 357,022 sq.km and the macrocosm rough 82 million people. Historically, Germany has evolved braces of unifications and reunifications including the last one in 1990. Excellent infrastructure, location, skilled workforce and mode pass judgment wage stray oblige Germany very attractive for business. Notwithstanding, there ar some environmental problems, much(prenominal) as air and water pollution, s fossil cover erosion, diminishing biodiversity and shortage of resources.The joined Arab Emi order is located on the eastern part of Arabian Peninsula and shares borders with the Kingdom of Saudi-Arabian Arabia to the south, Oman to the east and sea sharing borders with Qatar. Also, country has a direct access to Persian Gulf and Indian Ocean. The UAEs total area is much smaller, lonesome(prenominal) 83,600 sq. km. The unify Arab Emirates thrift and stability is substantiating by its considerable oil wealth that was discovered in 1960th, most of which is concentrated in Abu Dhabi the countrys cap ( united Arab Emirates profile 2012). Although, the UAE pass oning dwell be contingent on the oil reserves for many geezerhood to come, nevertheless, its aim of dependency is step by step declining. The main role in developme nt was taken by Dubai, which has mother a regional financial, commercial powerhouse and o one the extremum tourism centers of the Gulf Region. Moreover, a strong combination of oil charges, sufficient financial and fiscal resources, political stability, regulatory reforms and infrastructure development ordain backing the UAEs country happen profile.Germany represents a federal parliamentary, representative state with a six main political parties, dominated by the Christian Democratic Union, the Christian Social Union of Bavaria and the Social Democratic parties. The laissez passer of the government who exercises executive power is a Chancellor Angela Merkel. Nevertheless, due to the circumstance that Germany is a member of European Union and G8, policies are subordinated with those organizations. As the biggest parsimoniousness in Europe, Germany contributes 25% of Eurozones GDP.The political structure of the United Arab Emirates is a league of seven monarchical amirates. His Highness Sheikh Khalifa bin Zayed Al Nahyan is an emir of Abu Dhabi and the President of the country. The federal system of government includes the President, the Prime Minister, the Supreme Council, hint Princes and Deputy Rulers, the Federal National Council,the Council of Ministers (UAE Government 2012).Although, Germany has the second largest state in Europe, it faces an aging population. This implies some long term problems, such as sum up in governmental welfare expenditures, healthcare expenses, pensions payments and liberation in income tax. Nevertheless, countrys immigration policies and laws eagerness up favorable conditions for immigrants, and immigration rate exceeds emigration level. 10% of Germanys population consists of non-native nations, such as Turkish, Greek, Italian, Russian, Polish, Spanish and Serbo-Croatian. accord to World Bank, UAEs locals constitute lonesome(prenominal) 16.5% of the total population. Meanwhile, the number of expatriates emergence over age, Indians accounts the biggest part with a 1.7 million people. Also, most of native representatives dispose to work in public sectors, benefiting with a higher salaries, shorter working hours, greater job security, while 98% of private-sector workplaces are occupied by expatriates.As the graphs below represent the population pyramids for compared countries, we can mention the aging population in Germany, as was described previously. Also we pay attention on diversion in population composition of those countries. Almost in each age group Germanys population is somewhat balanced between male and female genders. On the other hand, we can see the drastic difference between male and female composition of United Arab Emirates population. old age groups from 20-64 is highly dominated by males this caused by the fact that most of them are expatriates and they are coming to the country in search of a job, passing their families in home countries.Source US Census Bureau, Interna tional entropy base (IDB)GDP GrowthThe economy of Germany continues to be based on individual outlay and going to assure by further investments, retardation next exportings is still deterring exploitation. Germany has been decreased its dependence on exports in fresh years. In addition, the Social Democratic Party has successfully pushed for an expenditure step-up in infrastructural, educational sectors, as well as pension append and minimum-wage regulation across all country by 2015.Eurozones debt-crisis caused hesitation on consumers confidence and future expectations about their personal finances. Income is continuing to be supported by stable employment and join on in sightly wages. Also the judge perseverance of historically low interest rates impart reinforce investment growth during upcoming years. Cheap mortgages will robust construction industry. exports will recover during 2014, but the Eurozone crisis and geopolitical conflicts in the Ukraine and the Middle East are limiting scope. Although consecutive economic stabilisation in the European Union will permit German exports to strengthen, the spikes in rebound trend during end of 2013 and beginning of 2014 the natural structure of European debt crisis which in turn will limit the speed and vigour of export recovery. Furthermore, incandesce of Ukrainian situation and possible further escalations of actions in Iraq are incrementing worlds uncertainty and keeps international trade back.The expected growth of the GDP of UAE is 4.3% in current year. Compared to the previous year the GDP growth, the highest after Great Recession, has declined. Economic growth had a strong acceleration in 2013 of 5.2%, but then economy faces some difficulties. Oil GDP expands only at a 1.8% rate this year, following 4.8% in 2013. With average globose expenditure of $109 per barrel in 2014, UAE oil output which concentrated within the Abu Dhabi emirate is going to reach around 2.7-2.8 million barrels per day.Non-oil sectors of the economy will continue to outrun growth driven by oil extraction. exercise in the non-oil sector has been steadily recovering following the downturn in 2009 and will continue to be the driving force of the economys growth momentum in 2014. Non-oil GDP is continuing holding on the akin level as in 2013 approximately 5.4%. The UAE has economy is relatively stable amid the disorder in the region. The key non-oil activities such as tourism, retail, and service help to drive the growth. Manufacturing activities led by aluminium and petrochemical industries is going to strengthen the following years. Also strong economic conditions will benefit both the transport and trade sectors. Real domain and construction sectors also alter along with overall market conditions. Infrastructure and development projects also had an redundant motivation with Dubais award of next Expo city. A set of regulations implemented by authorities will help against a recapitulate of a boom cycles in Dubai. All these facts regarding Expo 2020 should provide a platform for a stable growth in tourism, construction, transport and cordial reception industries in next 5 years.20032004200520062007200820092010201120122013Germany-0.38%1.16%0.68%3.70%3.27%1.08%-5.14%4.01%3.33%6.89%4.32%UAE8.80%9.57%4.86%9.84%3.18%3.19%-4.80%1.67%3.88%4.37%..GDP by type of expenditureAccording to the expenditure approach of calculation of Gross Domestic Product, it equals to the sum of such components as consumption (C), investment (I), government purchases (G), and net export, i.e. difference between export and import (NX) Y=C+I+G+NX.GermanyUAEGross capital formation (% of GDP)17.2622.66General government final consumption expenditure (% of GDP)19.296.90Household final consumption expenditure, etc. (% of GDP)57.5349.75Net Export (% of GDP)5.9220.68InflationUAE consumer inflation surpassed the 2% mark in April for the first time in five years, according to the National Bureau of Stat istics. Housing price inflation was relatively continual with 2.6% year on year in May Dubais inflation has lowered to 3.7% compared to 4.9% in April. Real estate has become the main inflation driver in UAE, excelling intellectual nourishment price inflation of 2.1%, even as food prices are increasing at 0.9$ rate per month.Consumer inflation is soon averaging 2.2% in 2014. The recovery of housing prices reflects the lengthened downturn in the real estate market. The annual inflation rate is expected to soar up to 3% by the end of 2014. benignity of worlds commodity prices is going to benefit the inflationary pressures. The United Arab Emirates could face higher problems in their inflation outlook if commodity and food prices go up.20082009201020112012Germany2.6%0.3%1.1%2.1%2.0%UAE12.3%1.6%0.9%0.9%0.7%Germanys nationwide inflation should remain at a very kind level between 1% and 2% in near future. Following the consumer prices inflation leaped from a 22-year low of -0.5% in 2009 to around 2.5% in 2011, the economic deceleration caused by the Europes debt crisis during 2012 and proto(prenominal) 2013 have led to a softening below 1.5% that will remain during 2014.On balance, core inflation should move broadly sideways to around 1.5% during 2014, as a boosting effect from the Germanys economic recovery is moon curser by the continuing restraints of the Eurozone debt crisis, also the anticipated downward tendency of oil prices due to global supply factors. Although, monetary policy of the European Central Bank (ECB) will be much lighter than Germanys economy is demanding. Germans traditional disinclines to inflation should limit the extent to which Germanys inflation will exceed the European average.Also, inflation will be stacked the level ECB considers unproblematic. Also due to pressure on ECB to buy Eurozones governments bonds and to accept higher inflation rates is enduring upward economic risk within the region.20072008200920102011Germany96.198.698.91 00102.1UAE8797.699.1100100.9Human Development indexThe Human Development Index summarizes the long-term development of a busy country or region. It includes three basic parameters living standard, knowledge availableness and health and longevity. The HDI is primarily based on international data provided by the United Nations Population Division, the United Nations Educational.In year 2013, The United Arab Emirates had a very high HDI repute of 0.827 which places the country on 40 out of 187 countries. From the very beginning of its existence as a government, the United Arab Emirates HDI had nurse increase from 0.640 to 0.827, and soared up for 29.2 percent. This gives us the average increase of about 0.78 percent per year.The Table below reviews the United Arab Emirates progress of the HDI indicator. Between 1980 and 2013, that was achieved by couple of factors the United Arab Emirates life expectancy at birth increased by 9.2 years, average years of schooling increased by 5.5 years and expected years of studying increased by 4.7 years. On the other hand, the United Arab Emirates GNI per capita has decreased by about 62.2 percent between 1980 and 2013, due to frightful increase in expatriate population.UAEGermanyGNI per capita (2011 PPP$)HDI valueGNI per capita (2011 PPP$)HDI value1980153,6540.6425,5880.7391985139,4210.68627,3550.752199097,1410.72531,0020.7821995102,2030.76432,6430.8252000103,7980.79735,4970.8542005104,6680.82337,2590.887201057,3600.82440,5420.904201156,3930.82441,9070.908201257,0950.82542,9650.911201358,0680.82743,0490.911The recent Germanys HDI value is 0.911 which in turns is one of the highest on the humans positioning the country at 6 out of 187 countries and territories. Taking the same time range as for UAE, 1980 and 2013, Germanys HDI value increased from 0.739 to 0.911, an increase of 23.3 percent or an average annual increase of about 0.64 percent. This in comparison to UAE is slightly lower.The table reviews Germanys progress in the HDI index. The increase in HDI is consisting of Germanys life expectancy at birth increased by 7.7 years, mean years of schooling increased by 7.2 years and expected years of schooling increased by 1.9 years. In terms of GNI, Germanys per capita increased by about 68.2 conversely to UAE, during the same closure of time.