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Jürgen Matthes IW-Policy Paper No. 3 4. June 2024 Strategic autonomy and economic security achieve efficiently

In this study an analytical scheme is developed to operationalise the objective of strategic autonomy in a cost-effective way.

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Strategic autonomy and economic security achieve efficiently
Jürgen Matthes IW-Policy Paper No. 3 4. June 2024

Strategic autonomy and economic security achieve efficiently

German Economic Institute (IW) German Economic Institute (IW)

In this study an analytical scheme is developed to operationalise the objective of strategic autonomy in a cost-effective way.

This is highly relevant as the concept of strategic autonomy is fuzzy and can therefore easily be misinterpreted in a way that would lead to large government subsidies for inefficient purposes in a time of high public debts, low growth and many other public spending needs.

The main criteria of the analytical scheme are the degree of critical import dependency on a specific product, the existence of production in the EU and a long-term comparative advantage for this product, as well as the possibility of diversified friendshoring to secure the supply of this product. Based on a product-specific eva-luation of these criteria, it can be decided whether or not government intervention is justified in order to achieve sufficient de-risking of critical import dependencies. This is illustrated using several examples, including raw materials, pharmaceuticals, electric vehicles, batteries for electric vehicles and solar modules.

If government intervention is found to be justified, the choice of instrument should be based on the principle that the degree of intervention should be minimised, provided that de-risking objective is sufficiently achieved. Several instruments such as warehousing, incentives for firm-based de-risking, trade barriers and subsidies are discussed. Weighing their pros and cons, it is derived that subsidies in general should be the last resort, i.e. only to be applied if other instruments are insufficient.

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Strategic autonomy and economic security achieve efficiently
Jürgen Matthes IW-Policy Paper No. 3 4. June 2024

Strategic autonomy and economic security achieve efficiently

German Economic Institute (IW) German Economic Institute (IW)

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How important is the economic partnership for us?
Galina Kolev-Schaefer / Samina Sultan IW-Report No. 36 13. September 2024

USA: How important is the economic partnership for us?

Despite the persistent protectionist course of US trade policy in recent years and China's rise as a global economic power, the German and US economies remain closely intertwined.

IW

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Berthold Busch / Björn Kauder / Samina Sultan IW-Report No. 34 12. August 2024

The EU and money: Who pays, who gets?

The German net position fell slightly in 2023 compared to the previous year, from 19.7 billion euros to 17.4 billion euros. However, it is still significantly higher than in the pre-Brexit period.

IW

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