OECD Economics Department Working Papers

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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

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Structural Change and the Current Account

The Case of Germany You or your institution have access to this content

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Fabrizio Coricelli1, Andreas Wörgötter
Author Affiliations
  • 1: Paris School of Economics-Université Paris 1, France

03 fév 2012
Bibliographic information
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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.
Germany, manufacturing, current account, productivity growth differences, services
Classification JEL:
  • E21: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Macroeconomics: Consumption; Saving; Wealth
  • E22: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Investment; Capital; Intangible Capital; Capacity
  • F32: International Economics / International Finance / Current Account Adjustment; Short-term Capital Movements
  • F41: International Economics / Macroeconomic Aspects of International Trade and Finance / Open Economy Macroeconomics
  • G18: Financial Economics / General Financial Markets / General Financial Markets: Government Policy and Regulation
  • H23: Public Economics / Taxation, Subsidies, and Revenue / Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
  • H55: Public Economics / National Government Expenditures and Related Policies / Social Security and Public Pensions
  • K20: Law and Economics / Regulation and Business Law / Regulation and Business Law: General
  • K31: Law and Economics / Other Substantive Areas of Law / Labor Law
  • O40: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Economic Growth and Aggregate Productivity: General
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