Economic relations between Germany and southern Europe

Abstract

Two interpretations have been advanced to account for persistent German current account surpluses that translate into equally persistent deficits of countries in the European periphery. According to the first, the German surplus is the expression of a 'virtuous' savings behaviour, to be extended to the periphery. The second maintains that the increase in net exports reflects the stagnation of German domestic demand. The paper argues that differences in price competitiveness are only part of the explanation of the disequilibria and that an expansion of German internal demand, albeit necessary, would not suffice to provide a viable response to the long-term sustainability of the euro area. Adopting a multilevel perspective, the paper argues that to understand the persistence of deficits in the European periphery, the main features of the reorganisation of the German economic system, including its income redistribution and demand implications, should be considered. Three elements are singled out: the effects of eastward enlargement, the impoverishment of the productive matrix of peripheral countries and the quality composition of trade flows. This analysis, it is argued, is a crucial premise for devising trade and industrial policies targeted on redressing the increasing skewness of EU trade, especially through greater trade among the deficit countries.

What Explains German Export Performances? Spatial Econometric Evidences: 1995 to 2014

“…Mainland China is one of the German main export destination countries and is the second largest importing country to Germany during this period according to the data from the Datastream. Indeed, the study of Simonazzi et al (2013) found that imports of low-end and mid-range price segment apparel/clothing goods from mainland China to Germany has an enlarging share of 45.8% in 1999 to 84.09 in 2008. The other major export-destination countries of Germany, such as USA, Switzerland, Austria, and Italy, are all in the top ten largest import countries of Germany according to data from the Datastream.…”

“…Two of the elements were singled out for its long-term current account surpluses by Simonazzi et al (2013): (1) the effects of eastward enlargement, (2) the impoverishment of the productive matrix of peripheral countries and the quality composition of trade flows.…”

Coping with Imbalances in the Euro Area: Policy Alternatives Addressing Divergences and Disparities between Member Countries

“…22 For reviews of the state of development of industry structures, productivity and trade relationships within the EU and the euro area, as well as the implications for industrial policies see the different perspectives in Aiginger (2012Aiginger ( , 2013Aiginger ( , 2014, Botta (2014), Pawlicki andStobbe (2012), Pianta (2014), Reinstaller et al (2012), Simonazzi et al (2013) and Stöllinger et al (2013), for example. On the general revival or return of industrial policy, see Aiginger (2014) and Wade (2012).…”

“…Generally, EU industrial and regional policies should promote "high road competitiveness" based on high-quality manufacturing production as the driver of growth, instead of relying on a low-wage, labor-intensive development strategy (Aiginger 2014;Simonazzi et al 2013). As a general rule for development, Thirlwall and Pacheco-López (2008, Chapter 5) argue that countries should try to expand their capacities in exports that are produced under increasing returns and which are highly income elastic in world markets, which means developing capacities in the production of manufactures.…”

“…For example in tourism higher segments such as business or luxury traveling could be developed (Pawlicki and Stobbe 2012). However, Simonazzi et al (2013) argue that the southern periphery countries need to increase the diversification of their export structures. While upgrading into higher product categories in the already existing industries is an important part of this diversification process, it also includes entering new industries.…”