Cyprus-Forum.com

[Nikitas]

Rapid growth rates are natural for underdeveloped countries in transition. A growth rate of 1 per cent for Germany translates into multiples in terms of value and volume the 10 per cent growth rate of a lesser developed country.

But there is another development which has more far reaching implications. As the standard of living rises in outsourscing countries like China and Turkey, and as transport costs rise, the cost of production in these countries becomes non competitive.

There is also another factor which is becoming quickly more relevant- computer controlled mass production and something called "mass customisation" which in turn bring down the cost of manufacturing in "First world countries" like the USA and Germany. We are already seeing the redomestication of production where the careful calculation of costs proves that bringing production from China back to Texas (of all places) brings costs down.

Finally, the rapid growth rates of China and Turkey are financed by buyers of their goods in first world countries. As the buyers in these countried cut back their purchases the bite will be put on these economies too. I do not see a great growth in the domestic consumption of either place as being a substitute.