Export experts
October 27, 2009
Until this year, when it was surpassed by China, Germany was the biggest exporter in the world. In 2008 alone, nearly a trillion euros worth of goods were shipped abroad, making up about 45 percent of the country's Gross Domestic Product. A quarter of Germany's workforce is in the export sector and every third euro earned in Germany comes from foreign trade.
Machines, chemical products and cars are the products that sent Germany to the top of the export league tables, but it's not just big companies that are successful in global trade. So-called "Mittelstand" small and medium-sized businesses also play an important role according to Werner Abelhauser, an economic historian at the University of Bielefeld.
"Even firms with 50 employees or so earn a great portion of their money abroad and have done so for a long time. That's just the way we produce things and we won't easily get away from that," Abelhauser said.
The Wonder Years
Since the end of World War II, Germany has become an export powerhouse, but things could have wound up differently. In 1944, while the war was still underway, American Treasury Secretary Henry Morgenthau proposed a plan for Germany's post-war development that would have dismantled all industry and turned the country into a purely agricultural economy.
The Morgenthau plan would have been a "poverty scenario" for Germany, said Abelshauser. But interest in the plan waned by 1947 and both the US Department of State and the War Department rejected it.
As the Soviet Union gained influence in Eastern Europe, the American government introduced the Marshall Plan, named after the then-Secretary of State George Marshall, to help rebuild Germany and the rest of Western Europe. As world trade began to recover from the Depression and World War II, German industry, with its continued emphasis on products like machinery and cars, was well-suited to grow rapidly in the 1950s, according to Abelshauser.
Political decisions also steered the economy towards exports. The Bretton Woods agreement tied Germany's currency, the Deutsche Mark, to the dollar at a fixed rate of around 4:1. This system kept the Deutsche Mark cheap even though German goods were highly sought after on the world market. Had there been a free-floating exchange rate, popular German products would have become more expensive. In the 1950s, industries including chemicals, steel and coal mining were also heavily subsidized.
A two-edged sword
During this period, known as the "economic wonder" years in Germany, exports quadrupled. Growing trade surpluses led to the piling up of currency reserves. Those surpluses continue to exist today and can be especially dangerous during economic downturns.
"The problem isn't so much that we're an exporting nation, but rather that we're an export-surplus nation. That means we're taking advantage of our trading partners insofar as they naturally have to run deficits to make up for our surpluses and that disturbs world trade. That leads to situations like economic crises," Abelshauser said.
The solution is straightforward in theory, but probably not in practice, said Abelshauser. "We must try to prevent surpluses. That means we have to import more in order to even out our balance of payments and trade balance."
The severe collapse in exports allowed Germany to slide deep into recession. But what was a problem in the past few months could soon become an advantage for German firms. When worldwide demand for cars or industrial goods begins to climb, Germany will once again profit more than others.
Author: Monika Lohmüller (bn)
Editor: Sam Edmonds