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The World Economy

Crossing Industry Borders: German Manufacturers as Services Exporters

Authors


  • I thank Horst Raff and Holger Görg and the participants of several workshops and seminars for their helpful comments. I am also grateful to Kim Adenau and Simon Lohner for the preparation of the service trade data and to the Bundesbank for granting access to the data and for the valuable support in handling it. Finally, I thank Eike Berner for advice in handling the Eurostat data. My research benefited from the financial support of the ‘Deutsche Forschungsgemeinschaft’ (DFG) and the ‘Globalisation, Investment, and Services Trade’ (GIST) Marie Curie Initial Training Network funded by the EU's Seventh Framework Programme. I am solely responsible for any errors.

Abstract

Manufacturing firms increasingly engage in service trade activities. Microlevel data show that German manufacturers accounted for nearly 30 billion euros of service exports in 2005. I have found that particular construction, engineering and R&D services are exported. The machinery industries, motor vehicles and chemicals producers dominate the overall pattern. The types of services exported vary strongly across industries. Service exports of advertising, data processing, management and R&D services are found to likely support foreign affiliates of firms. However, these headquarter services are only infrequently observable. Much more important are construction and engineering services exported by machinery firms. These might represent installation and maintenance services complementing exported machinery. R&D services exports generally represent the transfer of knowledge and technology, which is found to be particularly relevant for motor vehicle producers. Beyond the support of foreign production of firms, R&D services might be relevant also in R&D cooperations of firms or when firms have partnerships with foreign suppliers or buyers of intermediate products.

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