In the sphere of international trade, the rising competitors increased their share of global exports from 14.3 to 25.1 percent. As for the established, industrialised countries, while their percentage of the pie has declined, they have benefited from the growth triggered by the emerging, industrialising countries.

Agnes Millack

Referentin in der IW Consult

Agnes Millack

Germany has lost some of its share of the global market to new competitors over the past 20 years. In the global industrial sector, its share of value added dropped roughly from nine to six percent between 1995 and 2012. In absolute terms, however, Germany was able to increase its industrial value added by 45 percent between 1995 and 2013, from 338.1 to 561.3 billion euros. Germany is clearly one of globalisation’s winners. Few established, industrialised countries have had comparable success at turning globalisation to their advantage. Between 1995 and 2012, industrial value added grew by only three percent in France and nine percent in the United Kingdom. In Japan, it dropped by seven percent. Germany has been able to maintain its share of the global export market – benefiting from dynamic market trends in the new competitor countries; close international ties, particularly within the European production network; and integration into international value chains.

Germany has significant strengths relative to other countries, but one of its weaknesses is costs. A strong emphasis on technology has allowed German industry to gain a temporary advantage, but it is under increasing pressure. Two-thirds of industrial firms believe that Chinese competitors will have made great strides in narrowing the technological gap within the next five years. Furthermore, one-third of companies with foreign production sites indicate that their foreign activities are replacing domestic production. All of this suggests that the pace at which Germany is losing ground as an industrial site is accelerating somewhat. Site quality is particularly important for strengthening domestic production. Research infrastructure can be improved. It is important to avoid new regulations that would drive up costs as well as excessively generous redistributive measures.