European Economy. Economic Papers. Germany's growth performance in the 1990's

Table 3.1: Net external balance of goods and services
Billion DEM
% of GDP
Germany
West
East
Germany
West
East
1990
..
141.95
..
..
5.9%
..
1991
-6.88
152.16
-159.04
-0.2%
5.6%
-78.5%
1992
-7.78
187.07
-194.85
-0.2%
6.5%
-74.9%
1993
5.69
210.22
-204.53
0.2%
7.2%
-64.2%
1994
10.78
224.27
-213.49
0.3%
7.4%
-58.0%
1995
22.70
..
..
0.6%
..
..
1996
37.27
..
..
1.0%
..
..
1997
50.13
..
..
1.4%
..
..
1998
57.54
..
..
1.5%
..
..
1999
37.62
..
..
1.0%
..
..
2000
15.33
..
..
0.4%
..
..
Source : Own calculation based on European Commission (Ameco data)
In the following three years, the excess absorption fell as a percentage of GDP to below 60%
due to the high growth rates of the area in these years. However, in absolute terms, the external
deficit of East Germany increased to well above 200 billion DEM in 1994. Most of this deficit if
balanced by transfers from the West, which in turn ran an very large trade and service surplus in
1994 of 224 billion DEM or 7.4% of GDP.
Even though these statistics are no longer produced, there is little indication that the situation
changed much in qualitative terms in the second half of the 1990s. It is estimated that net
transfers, and hence the East net trade deficit of goods and services continue to be around 50%
of GDP and that the West is burdened to the rate of over 4% of GDP which is transferred to the
East (cf. Sinn 2000).
The weakness of East Germany’s export sector can also be seen from the relative trade shares of
the region. In 1991, barely 6% of East output was exported outside of Germany. From this low
level it even fell further to around 5% of GPD in 1993 and 1994. It has since doubled to reach
an unimpressive 10% in 2000 (Figure 3.6). While this marks relatively high export growth rates,
it has to be contrasted with a much higher West export rate of 25% of GDP in 1989, which
dropped to around 18% in 1993 and returned to about 25% in 2000. East Germany’s exports per
capita remain at a level of less than 30% of the West. Even when these figures are corrected for
the lower share of manufacturing in East German GDP and also taking out the German port
cities from the calculations, the export share of East German manufacturing barely attains 60%
of that of the West.
To be fair, the statistics might overstate the problem somewhat. As figures derive from customs
documentation, they do not always correctly register the place of manufacturing. Instead, they
reflect the place of shipment, often the company headquarters. This is distorting due to The fact
that East Germany often functions at extended workbench of the West, e.g. most West car
producers have put up factories in the East. This would imply that a share of East production
would not leave the country directly, but embodied in West products.
Source: Own calculation, Statistisches Bundesamt

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