Europe's exports superstar - it's the organisation! Bruegel Working Paper 2015/05, 15 July 2015

What explains Germany’s superb export performance? Is Germany’s export behaviour very distinct compared to other European countries? The authors explore the organisational responses to competition of 14,000 exporting firms in seven European countries. The paper examines the export business model of the median exporter and of the top one percent exporters in each country, accounting for 20 percent to 55 percent of total exports. What do these firms do to become superstars? The authors find, first, that the export market share of the median exporter in each of the countries to the world more than tripled (in some cases the export market share increases tenfold) for firms that combine decentralised management with offshoring of production to low-wage countries. Exporters which abstain from any organisational adjustment do very badly. Decentralised management provides incentives for workers for product improvements allowing exporters to compete on quality. Offshoring production to low-wage countries reduces costs allowing exporters to compete on price. Second, we find that Germany is the leading quality exporter in Europe followed by Austria and Spain. Among the top 10 percent of exporters there is no single firm with low quality in Germany and Austria, which suggest that decentralised management has provided incentives for quality in these countries. Third, Germany’s exports are less vulnerable to price increases, while exports from France and Italy respond strongly to price changes, and thus costs reductions via offshoring benefits these countries most.

What do Eurozone academics think about EMU reform? On broad support and German exceptionalism. Bruges Political Research Papers 41/2015.

This paper is an empirical contribution to the literature on the formation of policy preferences on Economic and Monetary Union (EMU) reform within its Member States. In the aftermath of the euro crisis, many proposals to ‘complete’ EMU have been tabled. However, discord among Member States has led to a piecemeal restructuring of EMU. For this paper, a survey has been conducted among euro area academic experts, gauging preferences on EMU reform. We find that general consensus masks significant discord among academics from different Member States. Our data indicates the existence of conflicting national epistemic communities, bound by shared causal beliefs on macro-economic policy. Academics within the key creditor Member State, Germany, assume an outlier position. Within the sample of German academics, economists are particularly strongly opposed to all moves in the direction of fiscal or social union. As economists are those academic experts most likely to influence the economic policy beliefs dominant among the German policy elite, these results are highly politically salient. We confront these findings with the literature on the exceptionalism of German economics. We contend that our results substantiate the claim that inadequate EMU reform and, more generally, the EU approach to the Eurozone crisis, can be partially explained by the firm grip these economic doctrines hold over the economics profession and policy-making circles in Germany.

The German Constitutional Court’s decision about the European Central Bank’s OMT [Outright Monetary Transactions] mechanism: A masterpiece of judicial arrogance. European Policy Briefs No. 30, April 2014

The German Constitutional Court (BVG) recently referred different questions to the European Court of Justice for a preliminary ruling. They concern the legality of the European Central Bank’s Outright Monetary Transaction mechanism created in 2012. Simultaneously, the German Court has threatened to disrupt the implementation of OTM in Germany if its very restrictive analysis is not validated by the European Court of Justice. This raises fundamental questions about the future efficiency of the ECB’s monetary policy, the damage to the independence of the ECB, the balance of power between judges and political organs in charge of economic policy, in Germany and in Europe, and finally the relationship between the BVG and other national or European courts.

Germany’s ‘refugee’ problem. The most important test for Chancellor Merkel and the grand coalition. OSW COMMENTARY NUMBER 182/11.09.2015 2015-09-11

The rapid increase in the number of immigrants from outside of the EU coming to Germany has become the paramount political issue. According to new estimates, the number of individuals expected arrive in Germany in 2015 and apply for asylum there is 800,000, which is nearly twice as many as estimated in earlier forecasts. Various administrative, financial and social problems related to the influx of migrants are becoming increasingly apparent. The problem of ‘refugees’ (in public debate, the terms ‘immigrants’, ‘refugees’, ‘illegal immigrants’, ‘economic immigrants’ have not been clearly defined and have often been used interchangeably) has been culminating for over a year. Despite this, it was being disregarded by Angela Merkel’s government which was preoccupied with debates on how to rescue Greece. It was only daily reports of cases of refugee centres being set on fire that convinced Chancellor Merkel to speak and to make immigration problem a priority issue (Chefsache). Neither the ruling coalition nor the opposition parties have a consistent idea of how Germany should react to the growing number of refugees. In this matter, divisions run across parties. Various solutions have been proposed, from liberalisation of laws on the right to stay in Germany to combating illegal immigration more effectively, which would be possible if asylum granting procedures were accelerated. The proposed solutions have not been properly thought through, instead they are reactive measures inspired by the results of opinion polls. This is why their assumptions are often contradictory. The situation is similar regarding the actions proposed by Chancellor Merkel which involve faster procedures to expel individuals with no right to stay in Germany and a plan to convince other EU states to accept ‘refugees’. None of these ideas is new – they were already present in the German internal debate.