Zur Bedeutung des Freihandels und globaler Wertschöpfungsketten für Deutschland und Österreich

During the COVID-19 pandemic, global value chain integration became increasingly questioned and the idea of reshoring the production gained momentum. In this contribution, we discuss the importance of free trade and value chain integration with special focus on the role of global final demand for Austria and Germany. We show that Germany and Austria are deeply integrated in global value chains and hold a relatively central position. Furthermore, roughly a third of value added of the two countries is eventually consumed or invested abroad. While the share of value added consumed or invested abroad accrues to more than 80% in some manufacturing industries, specific services industries are also deeply integrated in global value chains, most notably wholesale trade and financial services. Nevertheless, most services industries’ value added is predominantly consumed or invested domestically. Due to large economic welfare costs of reshoring global value chains, specifically because of retaliation measures as well as potential losses of comapartive advantages, the COVID-19 pandemic should not be used as a justification for a return to a more protectionist international trade regime. Thus, it is central for economic policy in Austria and Germany to support and promote the presence of their companies in international value chains by fostering their productivity and to spur the advancement of European and global economic integration.