1. Export champion and Bazaar economy? How Germany is coping with globalization 13 September 2006 7TH OECD INTERNATIONAL TRADE STATISTICS EXPERT MEETING (ITS) Dr. Claudia Wörmann

2. Germany in international competition  Export  Export quota 2005: 40 % (1990: 25 %) engineering:75 % automotive industry:70 % chemical industry:70 %  International sales  DAX-3074 %  German Mittelstand: Herrenknecht: 92 % Kässbohrer: 95 %

3. Germany in international competition  Internationalization strategies  Cost reduction / rationalization  Relocation  Reorganization of the value chain  Complementary production

4. Germany in international competition  German economic trends  Germany’s industrial production base is declining  “Made in Germany” is no longer originally produced in Germany  Transformation from a production site into a commercial hub

5. Bazaar economy: Statistical evidence and indications  industrial share in the economic value added: 1991: 25 % ↓ 2004: 21 %  vertical integration 1991: 39 % ↓ 2004: 34 %  foreign share of intermediate inputs 1995: 20 % ↑ 2000: 26 %  import share of exports 1991: 26 % ↑ 2005: 42 % engineering:30.9 % chemical industry:51.7% automotive industry:37.0 %

6. Bazaar economy: Shrinking manufacturing sector  Relationship between manufacturing industry and industry-related services  Outsourcing  Product support services  Boundaries between the sectors are fading

7. Bazaar economy: An international phenomenon 1995 Import share of exports Trade openness index

8. Bazaar economy: An international phenomenon 2000 Trade openness index Import share of exports 2000

9. Bazaar economy: Export-induced value added  German gross value added, in terms of merchandise exports: 1995: 2005: 13.7 % ↑ 20 % automotive industry: 2.4 % ↑ 4.3 % engineering: 2.5 % ↑ 3.3 % chemical industry: 2.0 % ↑ 2.2 %