Measures of External Competitiveness for Germany

IMF Working Papers, September 1, 1994

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This paper assesses Germany's external competitive position from several angles.
It first examines movements in several real exchange rate indices.
The analysis is supplemented by the constant market share approach.
The paper briefly examines pressures on profit margins in the tradable goods sector and export prospects.
A key conclusion: the deterioration of Germany's external competitiveness suggested by some commonly used indicators of the real appreciation of the deutsche mark, such as those based on relative unit labor costs in manufacturing, is generally exaggerated.

Real exchange rate indices (several, not individually enumerated in the summary).
Constant market share approach.
Analysis of pressures on profit margins in the tradable goods sector.
Examination of export prospects and export performance indicators.

Indicators based on relative unit labor costs in manufacturing suggest a real appreciation of the deutsche mark.
The paper concludes that the deterioration in external competitiveness implied by those indicators is generally exaggerated.

Subjects: Competition, Economic sectors, Export performance, Exports, Financial markets, International trade, Labor, Labor costs, Manufacturing
Keywords: Asia and Pacific, business sector, Competition, competitiveness effect, deutsche mark, exchange rate, export, export order, Export performance, export prospect, Exports, Germany export indicator, Labor costs, Manufacturing, order statistics, WP