The Role of Global Value Chains for German Manufacturing

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Godart and Görg Figure 4: Services outsourcing by two digit industry Source: own calculations following Geishecker and Görg (2008) A second possible approach to gauge the importance of GVC is to turn back to the firm level and look explicitly at characteristics of foreign affiliates of German firms. Geishecker et al. (2009) do this for all Euro Area countries. They investigate the location patterns of Euro Area multinationals (not distinguishing nationalities within the EA) and find that most foreign activity is concentrated within the European Union. However, countries like China, Mexico and Brazil have become increasingly important, suggesting some global value chains link Europe to these three countries. We follow their approach but focus exclusively on Germany. 344 0 2 4 6 0 2 4 6 0 2 4 6 0 2 4 6 0 2 4 6 Basic metals (27) Chemicals (24) Coke (23) Electrical/Optical (31) Fabricated metal (28) Food (15) Furniture (36) Leather (19) Machinery (29) Medical (33) Motor vehicles (34) Office/Computers (30) Other mineral (26) Other transport (35) Publishing (22) Pulp/paper (21) Recycling (37) Rubber/plastics (25) Television/Communication (32) Textiles (17) 1991 1995 1999 2003 2007 1991 1995 1999 2003 2007 1991 1995 1999 2003 2007 Graphs by col2 Tobacco (16) Wearing apparel (18) Wood (20) year 1991 1995 1999 2003 2007 1991 1995 1999 2003 2007
The Role of Global Value Chains for German Manufacturing Figure 5: Geographic distribution of German foreign affiliates by destination country (2009) Sources: Bureau van Djik, own calculations. A foreign affiliate is defined by an ownership of at least 10 percent by a German company. Only countries with more than 1 percent of total German affiliates are represented. Accordingly, Figure 5 looks at the location pattern of foreign affiliates of German parents abroad. Similar to Geishecker at al. (2009) we find that many of the most important locations for German affiliates are within the European Union. For example, the figure shows that the UK and Austria are host to roughly 15 percent of German affiliates abroad each. The US is the third most important host country for German firms, while Canada is number 14, followed closely by Mexico. Hence, NAFTA seems to be an important market for German firms. With China, Brazil and Russia there are also three of the most important emerging markets on the list of top locations for German affiliates abroad which point to the global value chains binding German firms with these countries. Next, we decompose the primary activities of German foreign affiliates in different countries according to four groups: low-technology manufacturing, high technology manufacturing, less knowledge intensive services and knowledge intensive services suggested by Eurostat. Figure 6 provides a flavour of this break down for four different countries with a large German presence. 5 5 Note that for most other countries we do not have adequate information on the activity of German affiliates to disaggregate them according to these four groups. 345
Page 1 and 2: The Role of Global Value Chains for
Page 7 and 8: Figure 1: German exposure to compet
Page 9: Figures 3 and 4 break down services
Page 13 and 14: Table 6: Firms relocating abroad Th
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