Bring your friends closer and your enemies closer — Part III

Image: Ireland’s Prime Minister Leo Varadkar (left) and newly elected Prime Minister Mihor Martin on June 27, 2020. source: Oireachtas house, CC BY 2.0, Via Flickr.

December 2021 — MythBusters

Start this last part of the recovery series (see)

Part I When Part II) A huge and easily overlooked economic success story. Small European countries, especially Northern Europe, outperform their larger neighbors in terms of wealth. This may be the most drastic example of a financial return to date. In the euro area, Germany stands out in terms of gross domestic product (GDP), followed by France. Both rise above smaller neighbors, comparable to the United States and Japan. Britain’s financial strength is now a thing of the past as the powerful eurozone gains more and more wealth. What was lost in this wealth explosion was the success of the smaller eurozone and its neighbors.

As of 2020, Germany’s GDP is 3.3 trillion euros ($ 3.9 trillion), leading the pack on the continent. In terms of GDP per capita, Denmark, which does not belong to the euro area, has $ 59,000, which is higher than France’s $ 46,000. The home of shell oil, the Netherlands (RDS.A

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), Airbus (EADSY) And Delhaize (ADRNYWith a population of about 19 million, it ranks near the top of all European countries with a per capita GDP of $ 52,200, comparable to the United States. Most notable is Ireland, which has long been behind England, with 4 million countries, including a large gap with the once wealthy Northern Ireland (32 six counties of Ireland). Their fate has been reversed. Emerald Isle’s GDP per capita is over $ 80,000, while the UK, including Northern Ireland, is $ 42,000.

Grab a day with expensive manufacturing

Part of the secret to success comes from doing what China is doing, but at the high end, taking on the best manufacturing jobs. Pfizer (PFE), Ford (NS) Etc. are proudly active in Ireland. The investment comes from the United States and other “trading partners”. Ireland is also highly regarded in financial processing. The industry thrives on a well-educated English-speaking population and offers cheaper operating options than the home country of a financial powerhouse.

Intercontinental wealth

Although less dramatic, this pattern is also found in Latin America. Chile’s GDP per capita is $ 15,000, which is higher than Mexico ($ 10,000), Brazil ($ 8,700) and Argentina ($ 10,000). Chile’s balanced economy, proportionately large middle class, avoidance of problems in big cities, and too many people working on farms have pushed Chile into a very valuable emerging category.

Central America follows. Panama’s GDP per capita of $ 14,000 and Barbados’s $ 15,000 definitely outperform the hottest Latin giants. Observers will find that Latin countries are far below the euro area in terms of wealth, but the evidence reflects the smaller and more successful economic patterns seen throughout Europe.

Investors always want to know why. For some notable reasons, small countries are avoiding the burden of large cities with many problems, especially crime and huge infrastructure costs. Small countries are also not subject to many migrations and reduce the cost of assimilation.

We have always done it that way

Powers are more closely linked to older and more expensive industries and operating methods. One of the interesting features of the last few decades is the transition from military power to economic vitality. Sanctions replace military aggression. However, the great powers cannot fully accept this trend.

In the United States, military spending accounts for 3.4% of total GDP, and although it has fallen over the years, it never goes away. American soldiers are stationed around the world, and the military forms a large and expensive industry in 50 states. For weeks, US news was dominated by a large and costly military withdrawal from Afghanistan. Powers are also trapped in the weapons industry, or military-industrial complex, and are spending huge amounts of cash on the latest weapons.

As an example, a few years ago, the United States sold $ 60 billion worth of military aircraft to Saudi Arabia. Much more money is spent on US military equipment each year.

Eurozone countries have no plans to invade. They are too busy counting money. Consider this a major change from World War II. France still supports 200,000 military personnel. There are only 23,000 active duty personnel in Norway with cash. Looking at the situation in Europe, Fort Bragg alone has an army of 54,000.

Having been in default a few years ago and struggling to accept austerity European mantras, Greece has achieved a comfortable position in the euro area as well as a strong German enviable financial support. This little democracy sells its agricultural and pharmaceutical exports to neighbors who share the same currency. Greece lags behind most of the wealth of its western neighbors, but its wealth has skyrocketed as a member of the euro currency group.

In addition to its vast offshore oil wealth, Norway can easily spread its wealth to its modest population of 5 million and literally runs out of cash from its vast oil sales.

Baltic score

The former Soviet Republic also has dogs in this battle. Former members of the Soviet Union and proud new members of the euro area, Estonia, Latvia and Lithuania, significantly exceed Russia’s per capita GDP. The total population of the three countries is about 7 million compared to Russia’s 146 million. Russia supplies oil and gas almost inexhaustibly, pumping up the world’s longest pipeline fiercely, but cannot step into its small neighbors in the distribution of wealth. As the euro, one of the three major currencies, expands, the ruble rattles.

This myth reveals juicy examples of rewards around the world. Equality, from day traders to small countries, is a real goal, and sometimes the results are shocking. Next month, Miss Buster will move on to another topic.


Michael McTague, Ph.D.Executive Vice President Able Global Partner Private equity company in New York.


Equity News Contributor: Michael McTague, Ph.D.

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The views and opinions expressed in this article belong to the author and are not necessarily the same. Readers should not consider the author’s remarks as a formal recommendation and should consult with a financial adviser before making an investment decision. To read our full disclosure, please visit:

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