Global Value Chain Integration of German Manufacturing

This study investigates the extent to which German manufacturing is embedded within global value chains. It addresses several key questions: To what degree is German manufacturing integrated into global production networks? What specific linkages exist with particular regions and trading partners? How do integration patterns vary across manufacturing industries? The aim of this study is to establish a robust empirical foundation to inform economic policy discourse on German manufacturing’s position within global value chains, particularly in light of the evolving global economic landscape. Our findings indicate that nearly 60% of value added in German manufacturing is dependent, either directly or indirectly, upon foreign demand, while approximately 30% of final production is attributable to imported inputs. In comparative international terms, Germany occupies a middle position between highly integrated smaller EU economies and large economies such as the United States and China. The temporal analysis reveals a significant intensification of integration until the early 2010s, followed by a period of relative stagnation. Geographically, German manufacturing maintains its strongest connections with fellow EU member states, whilst China has steadily increased in importance as a trading partner. The sectoral analysis demonstrates substantial variation in the degree of international integration, with the pharmaceutical industry, the chemical industry, and metal production exhibiting particularly pronounced dependence on foreign demand.