Germany in global value chains

How stitched is Germany into cross-border production networks, and where in the chain does it sit? Three figures built from the OECD TiVA 2023 edition: a 26-year trajectory of backward and forward participation, a sectoral decomposition of the foreign-value-added embed, and an Antràs & Chor (2018)-style position index.

Backward and forward participation

Backward participation measures foreign value added embedded in the country’s exports: how much of what DEU sells abroad was actually produced elsewhere. Forward participation measures domestic value added embedded in the exports of other countries: how much of what partners sell abroad was actually produced in DEU. The sum is total GVC participation; the ratio sorts upstream producers from downstream assemblers (Koopman, Wang & Wei 2014).

Where the foreign content concentrates

Aggregating across all exports hides the fact that different sectors use imported inputs in wildly different proportions. A country can look moderately integrated on average while one or two sectors (usually transport equipment, electronics, or apparel) are deeply dependent on imported intermediates. The chart below plots DEU’s foreign-VA share of gross exports for each ISIC Rev.4 sector in 2020, restricted to sectors that actually export.

Upstream or downstream

The position index is (forward − backward) / (forward + backward). Positive values identify economies that supply intermediates to others (the inputs end up being re-exported by someone else); negative values identify economies that absorb intermediates and re-export finished or semi-finished goods. The measure is close to the Antràs & Chor (2018) upstreamness index, which builds the same intuition from the Leontief inverse of the Inter-Country Input-Output table.

Value-added exports: the Johnson-Noguera VAX ratio

Johnson & Noguera (2012, Journal of International Economics) defined the VAX ratio as domestic value added absorbed abroad divided by gross exports. A VAX below 1 means part of what DEU ships out is value added elsewhere (imported intermediates) or domestic value added that returns via round-trip intermediates. The OECD TiVA proxy used here is EXGR_DVA / EXGR at the total-economy level; it undercounts the full Johnson-Noguera measure (which subtracts reflected DVA absorbed at home) but preserves cross-country ranks.

Total participation and Antràs-Chor upstreamness proxy

Antràs & Chor (2013, Journal of Political Economy) measure upstreamness as the average number of production stages between a sector and final use, computed from the Leontief inverse of the inter-country input-output table. Their index is bounded below by 1 (final-consumption goods) and increases with distance from final demand. The series below is a rank-preserving TiVA-share proxy, 1 + 3 × fwd / (fwd + bwd), mapped to the standard [1, 4] range. Total participation (backward + forward) tracks overall GVC intensity regardless of stage.

Supplier concentration by HS chapter

GVC participation is volume; GVC vulnerability is concentration. If half of a country’s pharmaceutical imports come from a single partner, a choke-point event (sanction, export ban, factory failure) is a macroeconomic event. The chart below uses the CEPII GeoDep dataset (Arto, Rueda-Cantuche & Corsatea 2024, “Identifying strategic dependencies”) which computes, for every HS6 line, the share of imports sourced from the largest partner (share_odpt). We aggregate to the 2-digit HS chapter, weighting HS6 lines by Germany’s import value in —, and report the top 20 chapters by import size.

Position change 2005-2020

The 2005-2020 window covers the last great wave of offshoring, the 2008 crisis, the Antràs & Chor (2018) “GVC slowdown,” the US-China tariff escalation of 2018-19, and the Covid-era supply-chain disruption. Each point below is one economy’s change in backward (Δ FVA/EXGR) against its change in forward (Δ IDC/EXGR) participation over this window. Economies in the upper-right deepened on both margins; lower-left economies retreated; the diagonal separates upstream (forward > backward gain) from downstream shifts. Germany is highlighted in amber.

The top 10 most GVC-integrated industries

Where inside Germany’s export bundle does foreign value added actually sit? Ranking sectors by the level of foreign value added embedded in their gross exports (USD millions) instead of just the share corrects for scale: a 60% FVA share in a tiny sector is a smaller macroeconomic exposure than a 35% share in a sector that accounts for a quarter of gross exports. OECD (2021, Trade in Value Added: Key Insights) recommends this “share × size” reading for identifying the industries that carry a country’s real GVC footprint.

Where the exports go: destination-market composition over time

TiVA tells us how much foreign value is embedded in DEU’s exports; BACI tells us where those exports are absorbed. The four lines below split Germany’s gross goods exports across G7 (USA, CAN, GBR, DEU, FRA, ITA, JPN), EU27 ex-G7 (the other 24 EU member states), China, and Rest-of-World, in current USD. The post-2018 reorganisation of global production runs as much through the destination side (the China-decoupling and near-shoring narratives) as through the input-share side measured in TiVA, a point Antràs (2020, “De-Globalisation? Global Value Chains in the Post-COVID-19 Age,” NBER WP 28115) develops at length.

For comparison across economies, return to the global GVC index. For DEU’s full trade profile, see the Germany country page.

References. Antràs, P. & Chor, D. (2013). “Organizing the Global Value Chain.” Journal of Political Economy 121(5): 2127-2204. Antràs, P., Chor, D., Fally, T. & Hillberry, R. (2012). “Measuring the Upstreamness of Production and Trade Flows.” American Economic Review: Papers & Proceedings 102(3): 412-416. Antràs, P. & Chor, D. (2018). “On the Measurement of Upstreamness and Downstreamness in Global Value Chains.” In World Trade Evolution, Routledge. Johnson, R. C. & Noguera, G. (2012). “Accounting for Intermediates: Production Sharing and Trade in Value Added.” Journal of International Economics 86(2): 224-236. Koopman, R., Wang, Z. & Wei, S.-J. (2014). “Tracing Value-Added and Double Counting in Gross Exports.” American Economic Review 104(2): 459-494. OECD (2024). Trade in Value Added (TiVA): 2023 edition. Paris: OECD. Timmer, M. P., Erumban, A. A., Los, B., Stehrer, R. & de Vries, G. J. (2014). “Slicing Up Global Value Chains.” Economic Policy 29(80): 613-661.