WP_Post Object
(
    [ID] => 5297
    [post_author] => 13322
    [post_date] => 2009-09-19 14:04:35
    [post_date_gmt] => 2009-09-19 12:04:35
    [post_content] => The characteristics of the new growth model appearing in the United States and to a lesser extend in the euro zone, are stagnation of domestic demand and growth sustained by exports. 

This model is inevitable in a situation in which (as in Japan and Germany in the early 1990s) a decline in the household debt is necessary.  It implies a transfer of growth from the service economy to industry. 

To achieve a sufficiently positive net contribution of exports to growth, two possibilities can be imagined:

-A movement upmarket and enhancement of the efficiency of industry enabling it to gain market shares as in Germany and Japan combined with a reduction in producer costs;

-A weak currency compensation for the weak competitiveness of industry, as in the US. 

Nowadays it is clear that domestic demand will from now on be weak in the US and the euro zone, given the need to reduce household debt levels.

It is also clear that to maintain decent growth; these countries will need support from foreign trade, like Germany and Japan. 

However these countries have not made the same effort and   in the case of Spain we have a low investment in innovation, a poor situation of industry, and uncontrolled rise in unit producer costs and a weakening of exports when the euro appreciates.  The illness of the economy in Spain is clear but the remedies taken so far are not providing the cure.  Why are other European countries coming out of the crisis while Spain maintains of the symptoms of a weak economy?
    [post_title] => THE CHANGE OF THE NEW GROWTH MODEL
    [post_excerpt] => 
    [post_status] => publish
    [comment_status] => open
    [ping_status] => open
    [post_password] => 
    [post_name] => the-change-of-the-new-growth-model
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    [pinged] => 
    [post_modified] => 2023-12-13 13:55:40
    [post_modified_gmt] => 2023-12-13 12:55:40
    [post_content_filtered] => 
    [post_parent] => 0
    [guid] => https://economy.blogs.ie.edu/?p=5297
    [menu_order] => 0
    [post_type] => post
    [post_mime_type] => 
    [comment_count] => 0
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)

The characteristics of the new growth model appearing in the United States and to a lesser extend in the euro zone, are stagnation of domestic demand and growth sustained by exports. 

This model is inevitable in a situation in which (as in Japan and Germany in the early 1990s) a decline in the household debt is necessary.  It implies a transfer of growth from the service economy to industry. 

To achieve a sufficiently positive net contribution of exports to growth, two possibilities can be imagined:

-A movement upmarket and enhancement of the efficiency of industry enabling it to gain market shares as in Germany and Japan combined with a reduction in producer costs;

-A weak currency compensation for the weak competitiveness of industry, as in the US. 

Nowadays it is clear that domestic demand will from now on be weak in the US and the euro zone, given the need to reduce household debt levels.

It is also clear that to maintain decent growth; these countries will need support from foreign trade, like Germany and Japan. 

However these countries have not made the same effort and   in the case of Spain we have a low investment in innovation, a poor situation of industry, and uncontrolled rise in unit producer costs and a weakening of exports when the euro appreciates.  The illness of the economy in Spain is clear but the remedies taken so far are not providing the cure.  Why are other European countries coming out of the crisis while Spain maintains of the symptoms of a weak economy?