The Pathological Export Boom and the Bazaar Effect - How to Solve the German Puzzle

By H. Sinn. Social Science Research Network, 2006

197 citations recorded by the source corpus.

Germany is the laggard of Europe, yet the country is world champion in merchandise exports. The paper tries to solve this theoretical and empirical puzzle by diagnosing a “pathological export boom” and a “bazaar effect”. Excessively high wages defended by unions and the welfare state against the forces of international low-wage competition destroy too big a fraction of the labour intensive sectors and drive too much capital and labour into the capital intensive export sectors, causing both unemployment and excessive value added in exports. Moreover, excessive wages induce too much outsourcing of upstream production activities which implies that export quantities grow too much in relation to value added contained in exports. Finally, excessive wages cause capital flight resulting in a too large current account surplus.

Subfields: Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/93ef468f860a8e86145221488dfc360ff5226cb4

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. S. Danninger
2. Lucio Baccaro
3. Frederick L. Joutz
4. C. Benassi
5. Niklas Potrafke
6. A. Nölke

In Political Science and International Relations

1. C. Benassi
2. S. Danninger
3. Lucio Baccaro
4. Frederick L. Joutz

Citations in the corpus

• What Explains Germany's Rebounding Export Market Share? (2007, methodology): “The analysis also provides empirical support for the claim that German exports increased as a result of a regional division of labor in the production of goods (Sinn 2006, Hummels and others 2001).”
• Throwing Out the Ballast: Growth Models and the Liberalization of German Industrial Relations (2016, background): “Similarly, a survey by the Cologne Institute for Business Research reports that around 60 percent of enterprises between 1000 and 5000 employees set up new plants outside the old EU member states (cit. in Sinn, 2006, p. 1160).”