Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Institut für
Wirtschaftsforschung Halle
Globalization, International
Fragmentation and the Labour
Input for German Exports
An Input-Output Analysis
WIOD Conference
26-28 May 2010 in Vienna
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Institut für
Wirtschaftsforschung Halle
Questions to be answered
 How have German export and its import content
developed over the past decades?
 How does the growth in exports impact employment
and income compared to its loss as a result of increased
import penetration?
 Which employee skills levels are impacted more than
average by the import penetration of export production?
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
The Method
Standard Open Input-Output-Model
where:
-1
x= ( I- A) y
A
x
y
= Matrix of Technological Coefficients
= Gross Output
= Final Demand
Export-Induced Imports
imex = Aim ( I-Ad )-1 ex
where:
ex
im
= Import Content of Exported Domestic Goods
Aim
= Matrix of Coefficients of Imported Intermediaries
d
= Matrix of Coefficients of Domestic Intermediaries
= Exports
A
ex
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
German Exports and their Import Content in the period
from 1980 until 2006a
- at current prices 1980
1985
1991
1996
2000
2005
2006
bn Euro
[1]
Exports
[2]
Export goods produced domestically
[3]
Re-exports
188,7
283,3
374,1
453,3
670,6
900,5
1 031,2
181,1
268,0
347,5
404,4
576,6
760,0
863,9
7,6
15,3
26,6
48,9
94,0
140,5
167,2
[4]
Export induced imports
47,0
76,0
99,9
129,3
251,1
358,2
435,0
[5]
Intermediate goods
39,4
60,7
73,3
80,4
157,1
217,7
267,8
[6]
Re-exports
7,6
15,3
26,6
48,9
94,0
140,5
167,2
in %
[7]
Import content of exports ([4]/[1])
24,9
26,8
26,7
28,5
37,4
39,8
42,2
[8]
Intermediate goods ([5]/[1])
20,9
21,4
19,6
17,7
23,4
24,2
26,0
[9]
Re-exports ([6]/[1])
4,0
5,4
7,1
10,8
14,0
15,6
16,2
21,8
22,6
21,1
19,9
27,2
28,6
31,0
Memo item:
[10]
a
Import content of exports produced
domestically ([5]/[2])
The figures for the years 1980 and 1985 refer to the Federal Republic of Germany before reunification.
Source: Federal Statistical Office of Germany: Input-Output-Tables; authors` calculations.
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Institut für
Wirtschaftsforschung Halle
 At first glance the import content of German exports
increased in the 1990’s to almost 40%.
 Behind this growth a strong change in the composition of
German exports is hidden in favour of re-exports.
 The rate of re-exports in the total import content of exports
quadrupled from 4% in 1980 to 16% in 2006 whereas the
rate of export-induced intermediate imports increased from
20% to 26%. The strongest change was observed in the
second half of the 1990’s.
 At second glance the import penetration of German export
goods produced domestically also enhanced but less
dramatically. It started from 22% of the exports in the 1980’s
and reached almost 30% at the end of the 1990’s.
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Composition of German Exports
- in billion Euro 1 200
Re-exports
1 000
Domestic Products
800
600
400
200
0
1980
1985
1990
Sources: Federal Statistical Office Germany; IWH calculations.
1991
1996
2000
2006
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Composition of Export-Induced Imports
- in billion Euro 500
450
Re-exports
400
Intermediate Goods
350
300
250
200
150
100
50
0
1980
1985
1990
1991
Sources: Federal Statistical Office Germany; IWH calculations.
1996
2000
2006
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Share of Export-Induced Imports in Exports
%
45,0
40,0
Re-exports
35,0
Intermediate Goods
30,0
25,0
20,0
15,0
10,0
5,0
0,0
1980
1985
1990
1991
Sources: Federal Statistical Office Germany; IWH calculations.
1995
2000
2005
2006
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Share of Export-Induced Imports in Total Exports and in
Domestic Export Goods
%
45
40
35
30
25
20
15
10
5
0
1980
1985
1990
1991
1995
2000
2005
Share of exp.-ind. Imports in Total Exports
Share of exp.-ind. Imports in Domestic Export Goods
Sources: Federal Statistical Office Germany; IWH calculations.
2006
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Stylized Development of the Share of Export-Induced Imports
in German Exports
%
50
40
30
20
10
1980
1985
1991
1996
2000
Share of exp.-ind. Imports in Exports (total)
Share of exp.-ind. Imports in Domestic Export Goods
Share of exp.-ind. Imports in Exports (without re-exports)
Sources: Federal Statistical Office Germany; IWH calculations.
2005
2006
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Institut für
Wirtschaftsforschung Halle
Effects of exports on production of goods and use of income
Production phase:
Effects of exports on value added and employment
vaex = xex . * s
lex = xex .* b
where:
vaex
s
lex
b
=
=
=
=
Vector of Gross value added induced by the export of domestic products
Vector of gross value added shares in gross production
Vector of export-induced persons in employment
Vektor of labor input coefficients per 1 million Euro of gross production
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Income use phase:
Effects of income induced by exports
inex = W * lex
ypc = ( 1-k ) * inex
xin = ( I-Ad )-1 * ypc
where:
inex
W
pc
y
x in
=
=
=
=
Income induced by exports
Vector of avarage wages of labour force
Income-induced additional private consumption
Income-induced additional gross production
Institut für
Wirtschaftsforschung Halle
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Net Contribution of Domestic Export Goods to Value Added
- in billion Euro 700
600
500
400
300
200
100
0
1980
1985
1991
Sources: Federal Statistical Office Germany; IWH calculations.
1996
2000
2006
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Net Employment Effects of Domestic Export Goods
- in thousand persons 10 500
9 000
7 500
6 000
4 500
3 000
1 500
0
1980
1985
1991
Sources: Federal Statistical Office Germany; IWH calculations.
1996
2000
2006
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Balance of Effects on Gross value added and Employment
induced by Exports and imported intermediate Goods by main
economic sectors in Germany
- in % Gross value added
Persons in employment
Sector
1980
1991
2006
1980
1991
2006
4,2
2,0
-1,7
5,7
5,9
1,8
Secondary
56,3
52,8
44,3
58,0
52,5
38,2
Tertiary
39,5
45,2
57,4
36,3
41,6
60,0
100,0
100,0
100,0
100,0
100,0
100,0
Primary
Total
Sources: Federal Statistical Office Germany; IWH calculations.
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Institut für
Wirtschaftsforschung Halle
Extension of German IOTs by Skills
 Method: split of employment input by skills levels
 Source: households surveys (microcensus):
5 skills levels, 71 industries, 300 occupations,
3 groups of working time, gender
 Sample: 1 % per year
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Skill Levels
Low
Preparatory education, career preparation year
Medium
Vocational training, vocational school
Master craftsman, technician
High
Technical college, university of applied sciences
University degree, PhD
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Balance of Employment Effects of export induced Production
and imported intermediate Goods by main economic sectors
and skill levels in Germany: Changes between 1996 and 2006
- 1 000 persons -
Primary
Secondary
Tertiary
Total
Low
- 40
- 67
419
312
Medium
- 39
378
1 387
1 726
High
- 14
83
585
654
Total
- 93
394
2 391
2 692
Sources: Federal Statistical Office Germany; IWH calculations.
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Employment Effects of export induced Production and imported intermediate
Goods per 1 million Euro of Exports by main economic sectors and skill levels:
Changes in Germany between 1996 and 2006
- in persons Primary
Low
production
imports
total
Medium
production
imports
total
High
production
imports
total
Total
production
imports
total
Secondary
Tertiary
Total
-0,18
-0,02
-0,16
-1,29
-0,09
-1,21
-0,66
0,01
-0,67
-2,13
-0,10
-2,04
-0,28
0,00
-0,27
-2,61
-0,10
-2,51
-1,26
0,05
-1,31
-4,15
-0,05
-4,09
-0,03
0,01
-0,04
-0,41
-0,01
-0,40
-0,01
0,04
-0,04
-0,44
0,04
-0,48
-0,49
-0,01
-0,47
-4,31
-0,19
-4,12
-1,92
0,10
-2,03
-6,72
-0,11
-6,62
Sources: Federal Statistical Office Germany; IWH calculations.
Institut für
Wirtschaftsforschung Halle
Prof. Udo Ludwig, Dr. Ulrich Brautzsch
Conclusions
 Positive balance between gains due to growing exports
and the losses caused by increasing import content of
the exports.
 Production of export goods outdoes the labour intensity
of export induced imports.
 There is a positive balance in skill content between
exports produced domestically and export induced
imports.