Wednesday, November 16, 2011

Why Germany is richer than Italy...

It's all in the transport capabilities and routes
You know what's happening in Greece. Italy, Portugal and Spain will be the next countries to weather the storm. But why is it Europe's southern nations that are struggling the most?

The dense river network in northwestern Europe (not to mention more roads and railways) affords that region much lower transportation costs. Thus, Northern nations have a significant competitive advantage in exporting. The one trick Southern nations had up their sleeves—devaluing their currencies to make their exports cheaper—ended with the adoption of the euro.

The result? A Germany with a trade surplus, and an Italy with a national debt at 120% of GDP and more choppy water on the horizon...

- Stratfor, “Germany v. Italy”

1 comment:

  1. this is rubbish. Souther Europe began getting poorer than Norther countries at the end of the Middle Ages, when trade with the Middle East became dangerous because of the Ottomans and the New World was discovered. Before then, Italy and Greece had always been far richer than Germany, even if they were filled with mountains, which surely don't help trade and travelling.