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Structural Change and the Current Account: The Case of Germany

  • Fabrizio Coricelli
  • Andreas Wörgötter

Using empirical evidence from panel analysis of current account dynamics and of bilateral trade balances, the paper argues that the large German current account surplus during the 2000s can be explained by an increasing gap between productivity growth in manufacturing vis-à-vis services. Such a gap is due not only to improvements in the manufacturing sector but also to a significant slowdown of productivity growth in services. Therefore, despite the success in export markets, the German surplus may signal long-run weaknesses associated with constraints on service sector productivity growth and the inability of productivity growth in manufacturing to create positive spill-over effects on services. Persistence of barriers to liberalisation in services as well as the dominant type of technological progress in manufacturing, based on improving the efficiency of existing products, may partly explain these phenomena. A key factor behind these sectoral differences is the education system, which relies on highly specialised vocational schools, generating high returns for on the job training and creating incentives for efficiency gains in existing products and sectors. The paper concludes that there is room for comprehensive structural policies consistent with an equilibrium reduction in the current account surplus, accompanied by higher and more balanced growth. Réformes structurelles et balance courante : le cas de l'Allemagne À partir des données factuelles issues de l’analyse des graphiques de l’évolution de la balance courante et de la balance des échanges bilatéraux, cette étude montre que l’excédent de la balance courante allemande provient de l’écart grandissant entre la croissance de la productivité dans le secteur manufacturier et dans celui des services. Ce décalage s’explique, d’une part, par les améliorations apportées à l’industrie manufacturière, et, d’autre part, par le ralentissement marqué de la hausse de la productivité dans les services. En ce sens, malgré les performances de l’Allemagne en matière d’exportation, l’excédent de sa balance courante peut présager de certaines faiblesses sur le long terme ; le secteur des services pâtit d’une productivité bridée et ne bénéficie pas non plus de la hausse de la productivité du secteur manufacturier. L’explication de ce phénomène réside en partie dans la persistance de barrières à la libéralisation des services. En outre, le modèle de progrès technologique dominant dans l’industrie manufacturière allemande, axé sur l’amélioration de l’efficacité des produits existants, ne génère pas d’effet multiplicateur sur le secteur des services, contrairement à ce qui a été observé aux États-Unis. L’origine de ces disparités sectorielles est notamment à rechercher du côté d’un système éducatif qui repose sur des écoles professionnelles très spécialisées, très efficaces pour ce qui concerne la formation pratique, incitant à développer des gains d’efficacité pour les produits et les secteurs existants. La segmentation de l’éducation fait écho à la sectorisation de la réglementation ; elle freine l’adoption des innovations radicales et des nouveaux produits, qui relève d’une éducation plus généraliste, et crée de faibles barrières à l’entrée sur un marché intérieur caractérisé par son ampleur. L’étude conclut qu’il est possible de mettre en place des politiques structurelles globales compatibles avec une réduction de l’excédent de la balance courante, s’accompagnant d’une croissance plus forte et plus équilibrée.

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File URL: http://dx.doi.org/10.1787/5k9gsh6tpz0s-en
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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 940.

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Date of creation: 03 Feb 2012
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Handle: RePEc:oec:ecoaaa:940-en
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  1. Suparna Chakraborty & Robert Dekle, 2009. "Can International Productivity Differences Alone Account for the US Current Account Deficits?," Review of International Economics, Wiley Blackwell, vol. 17(4), pages 689-715, 09.
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  3. Jens Matthias Arnold & Andreas Worgotter, 2011. "Structural reforms and the benefits of the enlarged EU internal market: still much to be gained," Applied Economics Letters, Taylor & Francis Journals, vol. 18(13), pages 1231-1235.
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  8. Sinn, Hans-Werner, 2006. "The pathological export boom and the bazaar effect: How to solve the German puzzle," Munich Reprints in Economics 19602, University of Munich, Department of Economics.
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  11. Isabell Koske & Andreas Wörgötter, 2010. "Germany's Growth Potential, Structural Reforms and Global Imbalances," OECD Economics Department Working Papers 780, OECD Publishing.
  12. Olivier Blanchard, 2007. "Current Account Deficits in Rich Countries," IMF Staff Papers, Palgrave Macmillan, vol. 54(2), pages 191-219, June.
  13. Christopoulou, Rebekka & Vermeulen, Philip, 2008. "Markups in the euro area and the US over the period 1981-2004: a comparison of 50 sectors," Working Paper Series 0856, European Central Bank.
  14. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, June.
  15. Clovis Kerdrain & Isabell Koske & Isabelle Wanner, 2010. "The Impact of Structural Policies on Saving, Investment and Current Accounts," OECD Economics Department Working Papers 815, OECD Publishing.
  16. Jean-Marc Fournier & Isabell Koske, 2010. "A Simple Model of the Relationship Between Productivity, Saving and the Current Account," OECD Economics Department Working Papers 816, OECD Publishing.
  17. Dierk Herzer, 2012. "Outward FDI, Total Factor Productivity and Domestic Output: Evidence from Germany," International Economic Journal, Taylor & Francis Journals, vol. 26(1), pages 155-174, October.
  18. Felix Hüfner & Isabell Koske, 2010. "Explaining Household Saving Rates in G7 Countries: Implications for Germany," OECD Economics Department Working Papers 754, OECD Publishing.
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