Why Germany is the world's biggest exporter

German industry is booming, a fact that goes against the received wisdom of a country suffering high unemployment and perceived economic sluggishness.

by Financial Times, 19 May
Last Updated: 23 Feb 2015

Germany has been the world’s largest exporter of goods since 2003 and its companies have exported just under $1000bn worth of products, almost as much as the UK, France and the Netherlands combined. Indeed, exports generate some 40% of German GDP.

Germany has benefited from globalisation because of its world-class engineering sector – much of which is made up of small-to-medium-sized enterprises (the Mittelstand) that have learnt to operate across the world. For example, the globe’s largest excavator being used to drill two huge road tunnels under the Yangtze River is being assembled in Shanghai by Herrenknecht, a Black Forest-based company that employs fewer than 1500 and has sales of $490m (384m euros).

A recent survey showed that some 98% of Mittelstand enterprises have exposure to international markets. There are threats though. Germany’s economy is highly dependent on the continued economic growth and stability of all world markets. But the biggest threat of all lies in the "decoupling of a successful corporate Germany and the broader German economy".

Unemployment is high in Germany at 9m. The services industry has not created new jobs as fast the old sector has shed them and the engineering companies, so successful in the world economy, are not hiring the bulk of their new employees in Germany. Heraeus, the world’s largest precious metals trader, for example, has created 779 new jobs but only 30 of these are in Germany. The challenge, therefore, for German industrialists and politicians is how to spread the benefits of globalisation in the home country to prevent a serious backlash.

Source: German’s best-kept secret: how its exporters are beating the world
Bertrand Benoit and Richard Milne
FT, May 19 2006
Review by Morice Mendoza

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