International Economy

International Economy

Cross-border trade in goods and services, the exchange of savings and investment capital – in short: the international division of labour – are responsible for a large part of the prosperity enjoyed by the world’s population. Germany is particularly deeply involved in this global supply network.

German firms largely concentrate on their core competencies, such as research and development, at their original locations, while having simple production processes carried out abroad. As a result, low-skilled workers in the industrialised countries find themselves under pressure, although they also benefit from the lower prices at which many products can now be offered. Those who gain are the populations of developing and threshold countries with open markets. Since the early 1980s the proportion of the earth’s population with a purchasing power of less than a dollar a day has approximately halved.

Globalisation is reflected in political structures, too: neighbour states are forming ever closer regional communities and intensifying mutual trade. In the European Union, for instance, the common internal market has secured its citizens a remarkable standard of living. Germany takes full advantage of the free movement of people, goods, services and capital in the EU, sending almost two thirds of its exports to other members states.

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