World Cup has again captured international attention this year, and featured one of the worst losses in World Cup history (and quite unexpected). Germany appears to be an unstoppable powerhouse in their record eighth World Cup appearance, but Argentina isn’t expected to go down without a fight – despite their scoreless match in full time against the Netherlands. But while many reporters and news stations are speaking on the various soccer statistics, we’re more concerned with another set of metrics there – their business climate. And the countries on the opposite sides of the field are nearly polar opposites in terms of economy.
Ich liebe Deutschland!
I had the privilege of living in Germany during 2006 (not far from one of the cities hosting the preliminary rounds), and saw the first patriotic surge of the German flag since World War 2 at their World Cup performance. I can testify firsthand after living in Germany, they are well-known for two things – drinking beer and playing soccer. However, I can also testify to their thriving business environment.
As the leading financial powerhouse of the EU, Germany alone carries over 20% of the EU’s total budget, fully 5% higher (5% of a hundred billion euro budget, no less) than the next country, France. In addition, Germany is ranked in the top 93% of the world for transparency, and has consistently maintained below a 3% inflation rate. They are also ranked in the top 20 (#18) of Heritage Foundation’s Index of Economic Freedom. Finally, Germany has the 4th largest economy in the world, behind US, China, and Japan – in that order.
Day to Day in Germany
The German culture is a very open and honest one that has established aquasi-capitalist system with a socialist undertone, called Social Market Capitalism. This enables more small businesses in a very different way than free market capitalists – by ensuring the social welfare of all citizens, thus enabling them to spend more in small bakeries, eateries, and butchers (yes, real butchers). Trade unions and associations abound, ensuring more than substantial wages. One of the greatest benefits of German culture, however, is the work schedule –10 paid national holidays, and a minimum of 4 weeks of paid leave per year. Unlike many Americans, it’s rare for Germans to work on a holiday, and they actually use their vacation time.
Argentina, the Fiercely Independent!
Argentina stands as a stark contrast to Germany, while alternatively being very similar. Argentina is the most European among South American countries, and is a very relationship-oriented nation. Unlike Germany’s strong middle class, Argentina’s wealth is less evenly distributed. As recently as a few weeks ago, Argentina has officiallyentered a recession.
While it’s certainly possible they could emerge none worse for the wear, Argentina is presentlyembattled in a legal case concerning debt defaults in2005 and2010. The government has fiercely “protected” many sectors, which has seriously inhibited growth. While tariffs remain high, opening a business is even more cost-inhibitive. The Heritage Foundation has ranked them 166th in the world, out of a total of 178. Pakistan, Sierra Leone, Lebanon, Laos, and Vietnam were all ranked as“freer” in the economic sense of the word.
Greater Buenos Aires hosts roughly a third of Argentina’s total population in a thriving, vibrant city. Although the European influence is readily apparent, this nation is steeply rooted in its Latin-American and Indigenous culture. Argentina is also a major exporter of agriculture – especially beef and citrus fruits – and mild weather year round lengthens the growing season considerably.
Culturally, Argentinians have a reputation of being warm and friendly, and the notion of respect dominates much of this country’s behavior. However, corruption has increased significantly in an already corrupt nation. It’s not the citizens – the protests in 2012 were driven by political mishaps and inflation. While the people clearly want change to a true democracy, the politicians and government positions aren’t cooperating.
So…. Who’s Gonna Win?
When it comes to soccer, it’s hard to say who has the edge, though Germany is the heavy favorite. But when it comes to the economy and business culture, Germany is the clear winner for future investment. Their financial strength is one of the highest in Europe, their economic freedom is one of the highest in the world, and the many unions and trade association guarantee a strong middle class. Argentina, on the other hand, struggles with corruption and inflation, and while the people are collectively trying to impose reforms, those in power aren’t listening.
If I were an investor, my money would be on Germany.