What Explains Germany's Rebounding Export Market Share?
Posted: 2 Dec 2008
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What Explains Germany's Rebounding Export Market Share?
What Explains Germany's Rebounding Export Market Share?
Date Written: December 2008
Abstract
Germany's export market share increased since 2000, while most industrial countries experienced declines. This study explores four explanations and evaluates their empirical contributions: (i) improved cost competitiveness, (ii) ties to fast growing trading partners, (iii) increased demand for capital goods and (iv) regionalized production of goods (e.g. off-shoring). An export model is estimated covering the period 1993–2005. The dominant factors explaining the increase in market share are trade relationships with fast growing countries and regionalized production in the export sector. Improved cost competitiveness had a comparatively smaller impact. There is no conclusive evidence supporting the increased demand for capital goods hypothesis. (JEL codes: C22, F41).
Keywords: International trade, export, cointegration, bazaar economy
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