The Pathological
Export Boom and the
Bazaar Effect
World Economy Annual Lecture
Nottingham, 27 October
Hans-Werner Sinn
-
CESifo Munich
The German puzzle
H.-W. Sinn
Unemployment in Germany1) 1970 – 2005
5.0
Million persons
4.5
Germany
4.0
3.5
East-G
3.0
2.5
West Germany
2.0
1.5
1.0
0.5
0.0
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
1) Since 1991 western Germany without Berlin, eastern Germany including Berlin.
Source: Federal Labor Agency; 2005: calculations and forecast by the Ifo Institute, June 2005.
Aug. 23, 2005
H.-W. Sinn
Real Gross Domestic Product in Selected EU Countries
In 1995 prices, 1995=100
145
Ireland 105,5 %
140
135
130
125
120
115
110
105
100
(growth 1995–2005)
Finland 42.1%
Spain 40.1%
United Kingdom
33.0%
France 25.3%
Austria 24.8%
EU15 24.0%
Denmark 22.6%
Italy 15.3%
West Germany
14.0% (excl. Berlin)
East Germany
6.9% (incl. Berlin)
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Sources: Eurostat, 2005: Forecast by the European Commission; West Germany and East Germany: Arbeitskreis Volkswirtschaftliche
Gesamtrechnungen der Länder, April 2005; 2005: Forecast by the Ifo Institute (June 2005); Ifo Institute calculations.
R Aug. 1, 2005
H.-W. Sinn
Net Investment Share in NDP - International Comparison (2003)
Greece
Turkey
Spain
Ireland
Mexico
Australia
New Zealand
Czech Republic
Luxembourg
Austria
Iceland
Canada
USA
France
Italy
Portugal
United Kingdom
18.6
16.4
15.5
14.5
11.7
11.3
11.2
9.8
9.6
8.9
8.7
7.8
7.0
7.0
6.9
6.5
6.5
6.4
Euro area
Netherlands
Japan
Denmark
Sweden
Slovakia
Norway
Belgium
Finland
5.3
4.4
4.4
4.3
4.0
3.7
3.6
3.1
Germany
3.0
0
4
8
12
Source: OECD, database National Accounts - Volume 2, 1970-2003; Ifo Institute calculations.
16
in %
20
Aug. 23, 2005
H.-W. Sinn
But aren´t the Germans
export champions?
H.-W. Sinn
Exports in 2004
World Merchandise Trade and World Trade in Commercial Services
1,138.3
United States
Germany
1,040.9
Japan
659.3
China
652.3
France
559.4
United Kingdom
514.8
Netherlands
431.2
Italy
430.7
Canada
368.9
Belgium
358.4
319.7
Hong Kong
Korea
293.6
Spain
263.2
216.1
206.8
Singapore
Taiwan
0
200
400
600
800
1.000
1.200
US dollar billion
Source: WTO, Press Release: World Trade Report 2005.
April 15, 2005
H.-W. Sinn
• The German industry bazaar
• Outsourcing & fall of Iron Curtain
• The evidence on the bazaar effect
• Gains from trade?
• Rigid wages & welfare state
• Pathological export boom
• Conclusions & policy implications
H.-W. Sinn
The German
industry bazaar
H.-W. Sinn
450 silent stars
H.-W. Sinn
Top-Twenty Trade Fairs Worldwide (2001 through 2004)
Exhibition space inside (m2)
348,832
320,969
312,539
BAUMA + MINING, Munich
ELMIA-WOOD, Jönköping
CeBIT, Hannover
EMO Hannover, Hannover
Ambiente, Frankfurt/Main
MACEF, Milan
CONEXPO-Con/AGG, Las Vegas
imm cologne, Cologne
Automechanika, Frankfurt/Main
drupa, Düsseldorf
K, Düsseldorf
INTERMAT, Paris
IAA, Hannover
Heimtextil, Frankfurt/Main
ISH, Frankfurt/Main
interpack, Düsseldorf
HANNOVER MESSE, Hannover
SALONE INTERNAZIONALE DEL
MOBILE, Milan
IAA, Frankfurt/Main
ACHEMA, Frankfurt/Main
Source: Ausstellungs- und Messeausschuss der
Deutschen Wirtschaft e.V., Berlin 2005, on demand.
50
2001
2004
192,164
190,993
176,478
171,477
165,139
161,867
161,332
160,308
155,938
155,252
154,877
153,627
148,359
143,416
2001
142,277
2004
2004
2004
2002
2004
2004
2004
2004
2003
2004
2004
2003
2002
2004
141,792
138,345
0
2004
100
150
2003
2003
200
250
300
350
400
H.-W. Sinn
Top-Twenty Trade Fairs Worldwide (2001 through 2004)
Exhibition space inside (m2)
348,832
320,969
312,539
BAUMA + MINING, Munich
ELMIA-WOOD, Jönköping
CeBIT, Hannover
EMO Hannover, Hannover
Ambiente, Frankfurt/Main
MACEF, Milan
CONEXPO-Con/AGG, Las Vegas
imm cologne, Cologne
Automechanika, Frankfurt/Main
drupa, Düsseldorf
K, Düsseldorf
INTERMAT, Paris
IAA, Hannover
Heimtextil, Frankfurt/Main
ISH, Frankfurt/Main
interpack, Düsseldorf
HANNOVER MESSE, Hannover
SALONE INTERNAZIONALE DEL
MOBILE, Milan
IAA, Frankfurt/Main
ACHEMA, Frankfurt/Main
Source: Ausstellungs- und Messeausschuss der
Deutschen Wirtschaft e.V., Berlin 2005, on demand.
50
2001
2004
192,164
190,993
176,478
171,477
165,139
161,867
161,332
160,308
155,938
155,252
154,877
153,627
148,359
143,416
2001
142,277
2004
2004
2004
2002
2004
2004
2004
2004
2003
2004
2004
2003
2002
2004
141,792
138,345
0
2004
100
150
2003
2003
200
250
300
350
400
H.-W. Sinn
The fall of the Iron
Curtain:
Outsourcing
and offshoring
H.-W. Sinn
The bazaar effect
Outsourcing of upstream production
Hollow shell?
The example of the
Porsche Cayenne
H.-W. Sinn
60 % of SME’s engaged outside old EU
German direct investment in
eastern Europe higher than ever
Nearly 4 million jobs abroad,
800,000 in eastern Euope
Competitiveness of firms
vs.
that of employees
H.-W. Sinn
German workers lose their
monopoly position in
delivering to the bazaar
H.-W. Sinn
Labour Costs1) per Hour in 2004
Euros
Denmark
28.14
West Germany
27.60
Norway
Switzerland
Sweden
Austria
France
USA
United Kingdom
Ireland
Japan
Italy
Spain
Korea
Portugal
Hungary
Czech Republic
Estonia
Slovakia
Poland
Lithuania
Latvia
Romania
Bulgaria
China
27.31
25.31
23.32
21.50
20.74
19.91
19.89
18.79
17.95
17.24
16.59
10.00
7.21
4.53
4.49
3.88
3.61
3.29
3.03
2.52
1.78
1.45
1.10
0
1) Average labour costs in industry.
5
10
15
20
25
30
Aug. 23, 2005
H.-W. Sinn
Where is the evidence?
H.-W. Sinn
The decline in production
depth
H.-W. Sinn
The Declining Production Depth in Manufacturing
Share of own value-added in manufacturing output (1970 – 2004)
42
%
%
42
West Germany
40
40
38
38
36
36
34
34
Germany
32
32
30
30
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Sources: German Statistical Office, Special series 18, Series S.21 (West Germany; old National Accounts data),
Aug. 23, 2005
Series S.26 (Germany: National Accounts Revision, May 2005); calculations by the Ifo Institute.
H.-W. Sinn
The Declining Production Depth: Various Industries
Share of own value-added in manufacturing output (1970 – 2004)
%
%
West Germany
52
48
Germany
52
48
Electrical industry
Machinery
44
44
40
40
36
32
Basic metals,
fabricated metal
products
36
Chemical industry
32
28
28
24
24
Food, beverages and tobacco
Motor vehicles
20
20
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Sources: German Statistical Office, Special series 18, Series S.21 and Series 1.3, Ifo Institut calculations.
Aug. 23, 2005
H.-W. Sinn
Share of Manufacturing Value Added in GDP
34
%
1970-2004
%
32
34
32
West Germany
30
30
28
28
26
26
Germany
24
24
22
22
20
20
18
18
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Sources: German Statistical Office, Special series 18, Series S.21 (West Germany; old National Accounts data),
Aug. 23, 2005
Series S.26 (Germany: National Accounts Revision, May 2005); calculations by the Ifo Institute.
H.-W. Sinn
Outsourcing to
the service sector?
H.-W. Sinn
Bazaar-Economy
Components of the change in German manufacturing production
(manufacturing industry) 1991 to 2004, 1995=100
170
160
Imported intermediaries
(real)
150
140
Domestic intermediaries
(real)
130
120
Real output
110
100
Real value added
90
80
1992
1994
1996
1998
Sources: Federal Statistical Office; Ifo Institute calculations.
2000
2002
2004
Aug. 23, 2005
H.-W. Sinn
Components of Change in Manufacturing Output
1995 – 2004
Domestic intermediaries
(real)
33.5 %
49.8 %
Imported
Intermediaries
(real)
3.0 %
16.7 % Manufacturing
value added
(real)
29.3 %
Aug. 23, 2005
H.-W. Sinn
Exports and Imported Intermediaries1)
Euro billions
310
V = imported intermediaries1)
V = -100.2 + 0.53*X
280
Elasticity of
imports with
regard to
exports
250
220
= 1.36%
2002
2000
Elasticity of
exports with
regard to
value added
= 1.3%
190
Line of origin
160
1995
130
1991
100
350
400
X = exports1)
450
500
550
600
650
700
750
800
1) Both variables are deflated by the export price index.
Sources: German Statistical Office, National Accounts, Input-Output Tables,
Importabhängigkeit der deutschen Exporte and Sprcial series 18, Series S.26, Ifo Institute calculations.
Aug. 23, 2005
H.-W. Sinn
Is Germany affected more
strongly, and if so,
why?
H.-W. Sinn
Bazaar Effect in International Comparison
Share of own value-added in manufacturing output
40
%
Germany
38
36
4.0
34
3.0
32
EU except
Germany1)
30
1991
1993
1995
1997
1999
2001
2003
1) Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Portugal, Sweden, Spain,
United Kingdom.
Sources: German Statistical Office, Special series 18, Series S.26, OECD, STAN database for Industrial
Analysis, Deutsche Bundesbank, Ifo Institut calculations.
Aug. 23, 2005
H.-W. Sinn
Bazaar Effect in International Comparison
Share of own value-added in manufacturing output
40
%
Germany
38
36
USA, Japan, France,
United Kingdom
34
32
30
1991
1993
1995
1997
1999
2001
2003
Sources: German Statistical Office, Special series 18, Series S.26, OECD, STAN database for Industrial
Analysis, Deutsche Bundesbank, Ifo Institut calculations.
Aug. 23, 2005
H.-W. Sinn
Share of Foreign Intermediaries
in Total Intermediaries
Countries
Jahr
Share (%)
Italy
1995
2000
1995
2000
1995
2000
1995
2000
1995
2000
1995
2000
1995
2000
17
19
22
26
20
24
29
30
25
29
23
28
20
26
Denmark
Finland
Netherlands
Austria
Sweden
Germany
+2
+4
+4
+1
+4
+5
+6
Legend: All numbers refer to total economy. Those countries are mentioned for which Eurostat data are available.
Change of share in percentage points.
Aug. 25, 2005
Sources: Eurostat, Ifo Institut calculations.
H.-W. Sinn
Employment in Manufacturing
Change 1991 to 2003 in %
12.0
Canada
Spain
New Zealand 2)
Australia 1)
Norway
Finland
USA 1)
Italy
Luxembourg
Portugal
Netherlands
France 2)
Sweden
Denmark
Austria
Korea
United Kingdom 2)
Belgium
West Germany 3)
Japan 2)
Germany
-30
6.7
5.2
0.9
-3.9
-4.4
-4.7
-5.9
-8.2
-10.6
-11.1
-12.3
-14.4
-14.9
-16.2
-18.5
-18.6
-18.6
-22.2
-24.0
-26.9
-25
-20
-15
-10
-5
0
5
10
15
1) Australia, USA: 1991–2001. 2) New Zealand, France, United Kingdom, Japan: 1991–2002. 3) West Germany incl. Berlin.
Aug. 26, 2005
Source: OECD STAN, database for Industrial Analysis, 2005.
H.-W. Sinn
Employment in Manufacturing
11.0
Million persons
10.5
10.0
9.5
9.0
West Germany
Germany
8.5
8.0
7.5
including Berlin
7.0
6.5
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Sources: German Statistical Office, Special series 18, Series S.21 and S.26; Arbeitskreis VGR der Länder,
Volkswirtschaftliche Gesamtrechnungen, Länderergebnisse, Series 1, Part 1, February 2005.
Aug. 24, 2005
H.-W. Sinn
The causes
High wages
Geographical proximity
Cultural proximity
H.-W. Sinn
Secondary School Pupils1)
learning English, German and French in 2003
English
German
French
100
90
80
70
60
50
40
30
20
10
0
1) Pupils in the upper and lower levels corresponding to levels 2 and 3 of the
International Standard Classification of Education (ISCED) in % of all pupils at this level.
Source: Eurostat.
Aug. 23, 2005
H.-W. Sinn
Gains from trade?
H.-W. Sinn
Share of Export Induced Domestic Value Added1)
in German Gross Domestic Product
25
%
20
15
10
5
0
1991
1995
2000
2002
1) Gross value added directly created in the production of exports and upstream domestic production stages.
Source: German Statistical Office, Importabhängigkeit der deutschen Exporte, Wiesbaden 2004.
Aug. 26, 2005
H.-W. Sinn
International Terms of Trade1)
110
Index (2000=100)
110
100
100
90
90
80
80
70
70
50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
1) Ratio of price indices of exports to price indices of imports.
1950 to 1990 West Germany, from 1991 Germany.
Sources: German Statistical Office, (1991–2004) Special series 18, Series S.26, Table 2.3.3; (1970–1991) Series S.21, Table 3.3.1;
Aug. 24, 2005
(1950–1970) Lange Reihen der Wirtschaftsentwicklung 1998, Wiesbaden 1999, Table 15.3.
H.-W. Sinn
Labour Volume
1995 – 2004, Full-time Equivalents
Manufacturing industry
- 1.09 mill.
Employment in the
- 0.17 mill.
rest of the economy
1.26 mill.
NonEmployment
Aug. 24, 2005
H.-W. Sinn
Why wages are rigid
H.-W. Sinn
Social assistance as job
killer of low-skill workers
The Harmonica Effect
H.-W. Sinn
Earnings Disperson1) in USA, United Kingdom and Germany
1980 – 2001
5.0
USA
4.5
4.0
United Kingdom
3.5
3.0
2.5
Germany
2.0
1980-84
1985-89
1990-94
1995-99
2000-01
1) 9 / 1 decile ratios for the gross earnings of full-time employees.
Source: OECD, Employment Outlook 2004, table 3.2, p. 141.
H.-W. Sinn
The pathological export
boom
H.-W. Sinn
High wages kill labour
intensive industries
H.-W. Sinn
Brecher (QJE 1974)
Davis (AER 1998)
H.-W. Sinn
The bazaar effect and the
pathological export boom
combined
H.-W. Sinn
Effects of a High-Wage Policy
Export sectors
(capital intensive)
Import competing
sectors
(labour intensive)
Upstream
(labour intensive)
Downstream
(capital intensive)
Normal
specialisation effect
Aug. 24, 2005
H.-W. Sinn
Effects of a High-Wage Policy
Export sectors
(capital intensive)
Upstream
(labour intensive)
Import competing
sectors
(labour intensive)
Bazaar
effect
Downstream
(capital intensive)
Normal
specialisation effect
Aug. 24, 2005
H.-W. Sinn
Effects of a High-Wage Policy
Export sectors
(capital intensive)
Upstream
(labour intensive)
Import competing
sectors
(labour intensive)
Bazaar
effect
Downstream
(capital intensive)
Normal
specialisation effect
Aug. 24, 2005
H.-W. Sinn
Samuelson´s argument
Biased technological progress
Countries become more similar
Trade collapses
H.-W. Sinn
Conclusion
• Strongest bazaar effect in Germany
• German workers lose their monopoly position
• No gains from trade with German welfare
• Pathological boom of value added in exports
• Pathological exaggeration of bazaar effect
H.-W. Sinn
Policy Implications
• Activating social aid
• Working retirement
• Investment wages
H.-W. Sinn
H.-W. Sinn
Gross National Income per Capita (1960 – 2004)
current prices and exchange rates
In thousand euros
35
30
1960-1969, 2003-2004 estimated on the basis
of GDP values
West Germany
25
20
France
15
Germany
10
5
50 %
East Germany
United Kingdom
0
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Sources: OECD, Annual National Accounts, Arbeitskreis Volkswirtschaftliche Gesamtrechnungen
der Länder (January 2004), Deutsche Bundesbank (2004): calculations by the Ifo Institute.
H.-W. Sinn
Gross National Income per Capita (1960 – 2004)
current prices and exchange rates
In thousand euros
35
30
1960-1969, 2003-2004 estimated on the basis
of GDP values.
25
20
15
Germany
EU15*
10
5
0
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
1) Without Belgium, Greece, Luxembourg, Sweden
Sources: OECD, Annual National Accounts, Deutsche Bundesbank (2004); calculations by the Ifo Institute.
H.-W. Sinn
Share of Export Induced Domestic Value Added1)
in German Gross Domestic Product
25
%
20
15
10
5
0
1991
1995
2000
2002
1) Gross value added directly created in the production of exports and upstream domestic production stages.
Source: German Statistical Office, Importabhängigkeit der deutschen Exporte, Wiesbaden 2004.
Aug. 26, 2005
H.-W. Sinn
Savings, Net Investment and Current Account Surplus in
Relation to Net Domestic Product, Germany 1991 – 2004
12
%
10
Net investment
8
Savings
6
Current
account surplus
(net exports
minus transfers)
4
2
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Sources: German Statistical Office, Special series 18, Series S.26, Ifo Institut calculations.
Aug. 24, 2005
H.-W. Sinn
Effects of a High-Wage Policy
Export sectors
(capital intensive)
Import competing
sectors
(labour intensive)
Intermed. stage
(labour intensive)
Final stage
(capital intensive)
Normal
specialisation effect
Aug. 24, 2005
H.-W. Sinn
Effects of a High-Wage Policy
Export sectors
(capital intensive)
Intermed. stage
(labour intensive)
Import competing
sectors
(labour intensive)
Bazaar
effect
Final stage
(capital intensive)
Normal
specialisation effect
Aug. 24, 2005
H.-W. Sinn
Abb. 12.1
Effects of a High-Wage Policy
Export sectors
(capital intensive)
Intermed. stage
(labour intensive)
Import competing
sectors
(labour intensive)
Bazaar
effect
Final stage
(capital intensive)
Normal
specialisation effect
Aug. 24, 2005
H.-W. Sinn
Germany in 2005
Private consumption
0,4 %
Gross investment
0,7 %
Exports
+ 4,1 %
Imports
Gross domestic product
++3,8
0,7%
%
Sources: German Statistical Office; calculations and forecast by the Institutes (Joint Analysis Spring 2005)
H.-W. Sinn
Trade Balance, Net Capital Outflow, Current Account Balance
and Net Capital Export; Germany 1980 – 2004
Euro billions
125
Economic trade surplus
= net capital outflow
100
Current net
transfers to
the world
75
Trade balance
50
25
Current account
surplus
0
-25
Net capital export
Currency export
-50
Currency import
-75
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Sources: Deutsche Bundesbank, time-series database; Ifo Institut calculations.
Aug. 24, 2005
H.-W. Sinn
20,0
18,0
16,0
%
Net Investment Share in NDP1):
Selected Industrialized Countries
OECD average 2)
14,0
12,0
10,0
8,0
Germany3)
6,0
4,0
2,0
EU15 except
Germany
0,0
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
1) Net investment as % of NDP; current prices. 2) Except Czech Republic, Poland, Hungary, Slovakia.
3) Until 1990 former west Germany.
Sources: German Statistical Office, Special series 18, Series S.21 und Reihe S.26; Eurostat, website;
OECD, National Accounts, Volume I, 2005 and Ifo Institute calculations.
Aug. 23, 2005
H.-W. Sinn
Social assistance as job
killer of low-skill workers
The Harmonica Effect
H.-W. Sinn
Qualification-Specific Unemployment Rates1)
in %
28
West Germany including West Berlin
2004
24
Without training
21.7
20
16
12
8
Completed occupational training2)
4
University degree
7.3
3.5
0
75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05
1) Unemployed in % of civilian labor force (excl. Trainees) with the same qualification, men and women.
2) Completed occupational training: within firm training, occupational school, special master‘s and technical.
Source: Institut für Arbeitsmarkt- und Berufsforschung der Bundesanstalt für Arbeit (IAB-Kurzbericht
Nr. 9/2005, Anhang 1.
Aug. 26, 2005
H.-W. Sinn
International Comparison of Qualification-Specific Unemployment Rates
in %
14.2
16
(30 to 44 year-old men, 20011))
Less than higher secondary education (no completed occupational training or
high school education)
University degree
10.7
12
Higher secondary education (completed occupational training or high school)
11.9
11.9
14
2.3
3.2
3.0
4.7
5.1
4.2
4.0
1.4
1.6
2.4
3.0
1.4
2.3
3.1
1.8
1.2
2.3
2.9
3.5
2.7
4.9
6.2
6.3
4.7
6.3
2.0
1.6
3.8
3.9
1.8
4.4
7.1
7.4
7.5
3.6
3.4
4.6
2.2
3.2
3.5
2.8
2.2
3.9
2.6
2.0
2
4.7
6
4
7.6
7.1
7.0
8
8.1
10
0
1) Belgium, Netherlands, Norway and Austria: 2000.
Source: OECD, Education at a Glance 2002: p. 117, Table A11.2.
H.-W. Sinn
Löhne und Gehälter
H.-W. Sinn
Real Hourly Labour Costs
in Manufacturing
Total Number of Man-Hours
worked: Total Economy
1982=100
1982=100
140
138
140
Western Germany
United States
130
136
130
124
120
120
120
Netherlands
Netherlands
110
110
104
100
100
100
United States
Western Germany
90
90
82 84 86 88 90 92 94 96 98 00 02
1) Manufacturing industry; West Germany
incl. western Berlin.
82 84 86 88 90 92 94 96 98 00 02
2) Total economy incl. government;
West Germany incl. western Berlin.
Sources: OECD, Institut der deutschen Wirtschaft, IAB; the Ifo Institute calculations.
H.-W. Sinn
Hourly Labour1) Costs in 2004
In euros
West Germany
27.60
Korea
10.00
Hungary
4.53
Czech Republic
4.49
3.88
Estonia
3.61
Slovakia
Poland
3.29
Lithuania
3.03
2.52
Latvia
1.78
Romania
1.45
Bulgaria
1.10
China
0
5
10
15
20
25
30
1) Average labour costs in industry.
Sources: For the accession countries, the Eurostat figures for 2000 were extrapolated on the basis of the Eurostat press release
no. 81 of June 21, 2005 or the ILO database Laborsta respectively. China and Korea 2001: ILO database Laborsta and
Ifo Institute calculations. West Germany: Cologne Institute for Business Research.
Oct. 18, 2005
H.-W. Sinn
Hourly Labour1) Costs in 2004
In euros
27.60
West Germany
19.82
East Germany
Hungary
4.53
Czech Republic
4.49
Estonia
3.88
Slovakia
3.61
Poland
3.29
Lithuania
3.03
Latvia
Romania
Bulgaria
2.52
1.78
1.45
0
5
10
15
1) Average labour costs in industry.
20
Sources: For the accession countries, the Eurostat figures for 2000 were extrapolated on the basis of the Eurostat press release
no. 81 of June 21, 2005 or the ILO data base respectively. West Germany: Cologne Institute for Business Research;
east Germany: Ifo Institute calculations.
25
Oct. 18, 2005
30
H.-W. Sinn
Employment in Germany
40.0
Mill. persons
January 1999 – August 2005
Mill. persons
30.0
39.5
Aug./05
Employees
39.0
39.031
(left-hand scale
38.933
29.5
29.0
38.5
28.5
38.0
28.0
37.5
27.5
37.0
27.0
36.5
Employees subject to
public insurance system
July/05
26.105
(right-hand scale)
36.0
26.5
26.0
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Source: German Statistical Office, Bundesagentur für Arbeit, September report 2005.
Oct. 18, 2005
H.-W. Sinn
Employment in West and East Germany
Regular and low-pay jobs, January 2000 to July 2005
January 2000=100
150
140
East Germany
incl. Berlin
Only employees in
low-pay jobs
130
Germany
4.8 mill. pers.
120
West Germany
110
West Germany
100
Germany
90
26.1 mill. pers.
East Germany
incl. Berlin
80
2000
2001
2002
2003
2004
Legend: Employees subject to public insurance system; monthly values, seasonally adjusted;
West: West German Länder, East: East German Länder incl. Berlin
Source: Bundesanstalt für Arbeit.
2005
Oct. 18, 2005
H.-W. Sinn
Employment in Germany
% change over previous year
4.0
3.0
Services2)
All employees
2.0
1.0
0.0
-1.0
-2.0
Producing sector1)
-3.0
-4.0
1996
1997
1998
1999
2000
2001
2002
2003
1) Manufacturing industry, mining industry and quarrying, power and water supply.
2) Public utilities and business services.
Source: German Statistical Office, Special series 18, Series 1.2, Table 2.5 (August 2005).
2004
2005
Oct. 18, 2005
H.-W. Sinn
Employment in West and East Germany1)
104
January 1994 = 100
104
West Germany
100
100
96
96
Germany
92
92
East Germany
88
88
84
84
80
80
- 2.2 % p.a.
76
76
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1) Employees subject to social security insurance; seasonally adjusted.
Sources: Federal Labor Agency, calculations by the Ifo Institute.
July
Oct. 18, 2005
H.-W. Sinn
Employment
Jobs in Germany, seasonally adjusted
40.0
Million persons
Thousand persons
Change over previous quarter
39.5
Mill. persons
+285
39.0
38.5
600
1)
+336
500
400
+131
+182
300
-221
38.0
excluding
extra jobs
-377
200
37.5
100
37.0
0
Forecast period
36.5
36.0
-100
-200
2001
2002
2003
2004
2005
2006
1) Change over previous quarter, 1000 persons (right-hand scale).
*Figures: change over previous year, 1000 persons.
Sources: German Statistical Office; calculations and forecast by the Institutes (Joint Analysis Spring 2005).
April 26, 2005
H.-W. Sinn
Employment in Germany: Full-time Equivalents
Million persons
40
1991–2004
39
Employees (official)
1995–2004
+ 0.24 mill.
+ 1.26 mill.
38
37
Employees as full-time
equivalents 1)
36
35
- 2.78 mill.
- 1.26 mill.
34
33
91 92 93 94 95 96 97 98 99 00 01 02 03 04
1) Year of reference regarding man-days and hours of work is 2000.
Sources: German Statistical Office, Special series 18, Series 1.2, Institut für Arbeitsmarkt- und Berufsforschung,
Kurzbericht 10/2005, Ifo Institut calculations.
Aug. 24, 2005
H.-W. Sinn
Basarökonomie
Deutschland
H.-W. Sinn
60 % des Mittelstands außerhalb EU
4 Mio. Jobs im Ausland
Etikettenschwindel
H.-W. Sinn
The Export Puzzle:
Germany in 2004
Private consumption
- 0.0 %
Gross investment
- 0.2 %
Exports
+ 9.3 %
Imports
Gross domestic product
+ 7.0
1.6 %
%
Sources: German Statistical Office, Special series 18, Series 1.2, Table 3.2 (August 2005).
H.-W. Sinn
Sonderfall Deutschland?
H.-W. Sinn
Sector Share of Value-added in Manufacturing
%
42.0
West Germany
Germany
38.0
2.9%
34.0
EU15
1.4%
30.0
26.0
1970
1975
1980
Source: OECD, Ifo Institute calculations.
1985
1990
1995
2000
H.-W. Sinn
Outsourcing ins Inland?
H.-W. Sinn
Bazaar-Economy
Components of the change in German manufacturing production
(manufacturing industry) 1991 to 2004, 1995=100
170
160
Imports intermediaries
(real)
150
140
Domestic intermediaries
(real)
130
120
Real output
110
100
Real value added
90
80
1992
1994
1996
1998
Sources: Federal Statistical Office; Ifo Institute calculations.
2000
2002
2004
Aug. 23, 2005
H.-W. Sinn
Gut oder schlecht?
H.-W. Sinn
Labour Volume
1995 – 2004, Full-time Equivalents
Manufacturing industry
- 1.09 mill.
Employment in the
- 0.17 mill.
rest of the economy
1.26 mill.
NonEmployment
Aug. 24, 2005
H.-W. Sinn
Fazit
Robustes Wachstum der Weltwirtschaft
Europa schwach
Deutschland nur im Schlepptau
Massiver Beschäftigungsabbau
Überzogene Basar-Ökonomie
H.-W. Sinn
Gross National Income per Capita (1960 – 2004)
current prices and exchange rates
In thousand euros
35
30
1960-1969, 2003-2004 estimated on the basis
of GDP values.
West Germany
25
20
France
15
Germany
10
5
East Germany
United Kingdom
0
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Sources: OECD, Annual National Accounts, Arbeitskreis Volkswirtschaftliche Gesamtrechnungen
der Länder (January 2004), Deutsche Bundesbank (2004): calculations by the Ifo Institute.
H.-W. Sinn
Gross National Income per Capita (1960 – 2004)
current prices and exchange rates
In thousand euros
35
30
1960-1969, 2003-2004 estimated on the basis
of GDP values
Denmark
25
Austria
20
Ireland
Netherlands
15
Germany
10
5
0
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Sources: OECD, Annual National Accounts, Deutsche Bundesbank (2004); calculations by the Ifo Institute.
H.-W. Sinn
The Export Puzzle:
Germany in 2004
Private consumption
0.6 %
Gross investment
- 0.2 %
Exports
+ 9.3 %
Imports
Gross domestic product
+ 7.0
1.6 %
%
Sources: German Statistical Office, Special series 18, Series 1.2, Table 3.2 (August 2005).
H.-W. Sinn
Economic Growth in the Euro Area
Growth 2005
%
%
6.0
5.0
4.6
3.9
4.0
6.0
5.0
4.0
3.2
2.8
3.0
2.0
Euro area 1.3%
0.7
1.0
0.8
1.4
1.5
1.5
3.0
1.8
2.0
0.9
1.0
0.1
0.0
0.0
Source: Eurostat; forecast by the Institutes: Joint Anaylsis Autumn 2005.
Oct. 21, 2005
H.-W. Sinn
Germany in 2005
Private consumption
Gross investment
- 0.5 %
0.9 %
Exports
+ 5.9 %
Imports
Gross domestic product
+ 4.2
0.8 %
Sources: German Statistical Office; calculations and forecast by the Institutes (Joint Analysis Autumn 2005)
H.-W. Sinn
Value-added Shares of Selected Manufacturing Sectors
in GDP 1970-2002
5.5
5.0
%
%
West Germany
Basic metals,
fabricated metal products
Germany
5.0
4.5
4.0
4.5
Machinery
Electrical industry
Motor vehicles
3.5
3.0
2.5
5.5
4.0
3.5
3.0
Food, beverages and
tobacco
2.5
Chemical industry
2.0
2.0
1.5
1.5
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Sources: German Statistical Office, Special series 18, Series S.21 (West Germany; old National Accounts data),
Aug. 23, 2005
Series S.26 (Germany: National Accounts Revision, May 2005); calculations by the Ifo Institute.
H.-W. Sinn
Weak economic spillover
H.-W. Sinn
World Economy, GDP 1970-2006
Constant prices, annual percentage change
8.0
7.0
6.0
5.1
5.0
5.1
5.1
4.8
4.7
4.7
4.0
4.3
4.3
3.0
2.0
1.0
0.0
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06
Source: International Monetary Fund, World Economic Outlook Database, September 2005.
Sept. 23, 2005
H.-W. Sinn
The Export Puzzle:
Germany in 2004
Private consumption
- 0.0 %
Gross investment
- 0.2 %
Exports
+ 9.3 %
Imports
Gross domestic product
+ 7.0
1.6 %
%
Sources: German Statistical Office, Special series 18, Series 1.2, Table 3.2 (August 2005).
H.-W. Sinn
Economic Growth in the Euro Area
Growth 2005
%
%
6.0
4.9
5.0
3.8
4.0
6.0
5.0
4.0
3.3
3.0
2.0
1.0
2.7
Euro area 1.6%
0.8
1.0
1.1
2.0
2.9
2.9
3.0
2.1
2.0
1.2
1.0
0.0
0.0
Source: Eurostat; European Commission, Economic Forecast April 2005.
June 11, 2005
H.-W. Sinn
Hourly Labour Cost (Manufacturing Industry)
30
Euro per hour
27
West Germany
24
21
18
15
Denmark
Norway
Switzerland
Sweden
Austria
France
Ireland
Italy
Spain
12
USA
United Kingdom
9
Portugal
6
Japan
3
0
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
Source: Institut der deutschen Wirtschaft, Cologne.
Aug. 23, 2005
H.-W. Sinn
Employment in Germany
Aggregated changes against December 2001 (1000 persons)
750
750
Low-pay workers
500
250
500
Employees in
Germany sa
Ich-AGs
250
0
1 euro
jobs
-250
0
-250
-500
-500
-750
-750
-1000
-1000
-1250
-1500
-1750
Employees subject
to public insurance system
-1250
-1500
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
2002
2003
2004
Sources: German Statistical Office, Bundesagentur für Arbeit; September report 2005;
Arbeitsmarkt in Zahlen: Employees in low-pay jobs, July 2005; Ifo Institute calculations.
-1750
2005
Oct. 18, 2005
H.-W. Sinn
Employment in Germany: Full-time Equivalents
Million persons
40
1991–2004
39
Employees (official)
1995–2004
+ 0.24 mill.
+ 1.26 mill.
38
37
Employees as full-time
equivalents 1)
36
35
- 2.78 mill.
- 1.26 mill.
34
33
91 92 93 94 95 96 97 98 99 00 01 02 03 04
1) Year of reference regarding man-days and hours of work is 2000.
Sources: German Statistical Office, Special series 18, Series 1.2, Institut für Arbeitsmarkt- und Berufsforschung,
Kurzbericht 10/2005, Ifo Institut calculations.
Aug. 24, 2005
H.-W. Sinn