20140908-NATIXIS-What_is_fundamentally_different_between_the_OECD_countries_where_growth_in_2014_will_be_quite_strong_and_those_where_it_will_remain_weak__12页_470kb

FLASH ECONOMICS: Summary of Economic Research - September 8, 2014 (No. 647)

Core Content

This document compares the economic performance of several OECD countries in 2014, highlighting a significant divide between those experiencing strong growth (United States, United Kingdom, Germany, Spain) and those with weak or stagnant growth (France, Italy). The analysis identifies three main structural factors that explain this difference.

Main Groups and Their Economic Performance

• Group 1 (Strong Growth): United States, United Kingdom, Germany, Spain
• Group 2 (Weak Growth): France, Italy

Key Differences

1. Industrial Recovery

• Positive trends in manufacturing production, exports, and productive investment are observed in the United States, Germany, and Spain.
• These trends are closely linked to cost competitiveness and companies' self-financing capacity, which are weak in France and Italy.
• Real wage growth is positive in Germany, but not in the other higher-growth countries.
• The abnormally high cost of unskilled labor in France and Italy prevents growth in services jobs.

2. Services Job Growth

• Rapid job creation in services has contributed to growth in the United States, United Kingdom, Germany, and Spain.
• This is not the case in France and Italy, due to the high cost of unskilled labor.
• The minimum wage as a percentage of median wage is particularly high in France, contributing to the lack of services job growth.

3. Wealth Effects

• Wealth effects from rising asset prices have played a significant role in boosting household demand in the United States and the United Kingdom.
• These effects are absent in France and Italy, as their economies are financed by bank credit and pensions are public, not funded.

Structural Handicaps in France and Italy

• Competitiveness: France and Italy lag behind in terms of productivity and profitability.
• Cost of unskilled labor: High in France and Italy, which hinders services job growth.
• Self-financing capacity: Weak in France and Italy, which is important during deleveraging.
• Wealth effects: Absent due to lack of financial market participation and public pension systems.

Summary of Key Findings

• Credit and fiscal policy do not explain the growth gap.
• Industrial recovery is a major driver of growth in the strong-performing countries.
• Services job growth is significant in the strong-performing group.
• Wealth effects from asset price increases are a key factor in the United States and the United Kingdom.
• France and Italy face structural challenges that prevent economic recovery, including high labor costs, weak competitiveness, and lack of wealth effects.

Tables and Charts

• Table 1: Real GDP growth forecasts for 2008–2015.
• Chart 1A and 1B: Real GDP growth trends.
• Chart 3A and 3B: Lending to households and companies.
• Chart 4A and 4B: Fiscal policy trends.
• Chart 5A and 5B: Real wage growth.
• Chart 7A, 7B, 7C: Manufacturing production, productive investment, and exports.
• Chart 10: Unit labor cost.
• Table 2: Price elasticity of exports.
• Table 3: Total hourly wage (including social charges).
• Table 4: Minimum wage.
• Chart 13A–D: Asset prices.
• Chart 14A–F: Market capitalisation and corporate investment.
• Chart 15A–F: Household wealth and demand.

Conclusion

The persistence of weak growth in France and Italy is due to structural handicaps in terms of competitiveness, profitability, self-financing capacity, and unskilled labor costs, as well as the absence of wealth effects. In contrast, the United States, United Kingdom, Germany, and Spain benefit from industrial recovery, services job growth, and wealth effects from asset price increases, which contribute to their stronger economic performance.