Labor costs, KIBS, and export performance: A comparative analysis of Germany and Mediterranean economies

  1. Daniel Herrero Alba 1
  2. Adrián Rial 2
  1. 1 Universidad Complutense de Madrid
    info

    Universidad Complutense de Madrid

    Madrid, España

    ROR 02p0gd045

  2. 2 Complutense Institute for International Studies (ICEI)
Revista:
Structural Change and Economic Dynamics

ISSN: 0954-349X

Año de publicación: 2023

Volumen: 65

Páginas: 198-184

Tipo: Artículo

DOI: 10.1016/J.STRUECO.2023.02.013 GOOGLE SCHOLAR lock_openAcceso abierto editor

Otras publicaciones en: Structural Change and Economic Dynamics

Resumen

Following the onset of the Eurozone crisis, Mediterranean economies (Greece, Italy, Portugal, Spain) followed the example set by Germany, implementing structural reforms with the aim of restraining labor costs and transitioning to export-led growth. Using input–output tables, this paper analyzes the role of labor costs and non-price factors in the export performance of the manufacturing sectors in these Mediterranean economies and in Germany. We estimate an export model taking subsystems as units of analysis, permitting us to consider how the productive linkages between manufacturing and services affect export growth. Our results show that the effect of labor costs on export performance has been negligible in these five economies, while non-price factors stand out as the main drivers of export growth. In addition, we find that the development of stronger linkages between knowledge-intensive business services (KIBS) and manufacturing provides a substantial stimulus for non-price competitiveness.

Referencias bibliográficas

  • Afonso, A. (2019). State-led wage devaluation in Southern Europe in the wake of the Eurozone crisis. European Journal of Political Research, 58(3): 938-959.
  • Afonso, A. and Bufone, F. (2020). Business Against Markets: Employer Resistance to Collective Bargaining Liberalization During the Eurozone Crisis. Comparative Political Studies, 53(5): 809-846.
  • Antonioli, D., Di Berardino, C. & Onesti, G. (2020). “Specialization and KIBS in the euro area: A vertically integrated sector perspective”, International Review of Applied Economics, 34(2), 267-290.
  • Armingeon, K.& Baccaro,L. (2012).The sorrows of young euro: The Sovereign Debt Crises of Ireland and Southern Europe. In J. Pontusson & N. Bermeo (eds), Coping with crisis: Government responses to the Great Recession. New York: Russell Sage Foundation.
  • Baccaro, L. & Benassi, C. (2017). Throwing out the ballast: growth models and the liberalization of German industrial relations. Socio-economic Review, 15(1): 85–115.
  • Baccaro, L. & Tober, T. (2021). The role of wages in the Eurozone. Review of International Political Economy. DOI: 10.1080/09692290.2021.1888143.
  • Baumol, W.J. (1967). Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis. The American Economic Review, 57 (3), 415-426.
  • Bayoumi, T., Harmsen, R. & Turunen, J. (2011). Euro Area Export Performance and Competitiveness. IMF Working Paper nº140.
  • Bulfone, F., & Tassinari, A. (2021). Under pressure. Economic constraints, electoral politics and labour market reforms in Southern Europe in the decade of the Great Recession. European journal of political research, 60(3), 509-538.
  • Calligaris, S. et al (2018). The productivity puzzle and misallocation: an Italian perspective. Economic Policy, 33(96), 635-684.
  • Carlin, W. & Soskice, D. (2014). Macroeconomics: Institutions, instability, and the financial system. Oxford University Press.
  • Chen, R., Milesi-Ferretti, G.M. & Tressel, T. (2012). “External imbalances in the Euro Area”, IMF Working Paper WP12/236.
  • De Juan, O. & Febrero, E. (2000). “Measuring Productivity from Vertically Integrated Sectors”, Economic Systems Research, 12(1), 65-82.
  • Di Berardino, C. & Onesti, G. (2020). “The two-way integration between manufacturing and services”, The Service Industries Journal, 40(5-6), 337-357.
  • Di Berardino, C. & Onesti, G. (2021). “Explaining deindustrialisation from a vertical perspective: industrial linkages, producer services, and international trade”, Economics of Innovation and New Technology, 30(7), 685-706.
  • Doellgast, V. & Greer, I. (2007). “Vertical Disintegration and the Disorganization of German Industrial Relations”, British Journal of Industrial Relations, 45(1):55–76
  • Dustmann, C., Fitzenberger, B., Schönberg, U. & Spitz-Oener, A. (2014). From Sick Man to Economic Superstar: Germany’s Resurgent Economy. Journal of Economic Perspectives, 28 (1), 167-188.
  • Eichhorst, W. (2015). “The Unexpecteted Appearance of a New German Model” British Journal of Industrial Relations, 53 (1), 49-69.
  • Falk, M. & Peng, F. (2013). The increasing service intensity of European manufacturing, The Service Industries Journal, 33(15-16), 1686-1706.
  • Fernández, R. & Palazuelos, E. (2012). European Union Economies Facing ‘Baumol's Disease’ within the Service Sector. Journal of Common Market Studies, 50 (2), 231-249.
  • Gräbner, C., Heimberger, P., Kapeller, J. & Schültz, B. (2020a). “Is the Eurozone disintegrating? Macroeconomic divergence, structural polarization, trade and fragility”, Cambridge Journal of Economics, 44(3): 647-669.
  • Hassel, A. (2014). “The Paradox of Liberalization-Understanding Dualism and the Recovery of the German Political Economy”, British Journal of Industrial Relations, 52(1):57-81.
  • Herrero, D. (2021). “Disentangling the transformation of the German model: The role of firms’ strategic decisions and structural change”. Competition & Change, doi:10.1177/10245294211015479
  • Herrero, D., & Rial, A. (2022). Productive linkages in a segmented economy: the role of services in the export performance of German manufacturing. Economic Systems Research, 1-28.
  • Hein, E., Meloni, W. P., & Tridico, P. (2021). Welfare models and demand-led growth regimes before and after the financial and economic crisis. Review of International Political Economy, 28(5), 1196- 1223.
  • Höpner, M. & Lutter, M. (2018). The diversity of wage regimes: Why the Eurozone is too heterogeneous for the euro. European Political Science Review, 10(1), 71 96. https://doi.org/10.1017/S1755773916000217
  • Johnston, A. & Regan, A. (2016). “European monetary integration and the incompatibility of national varieties of capitalism”. Journal of Common Market Studies, 54:318–336.
  • Kohler, K., & Stockhammer, E. (2021). Growing differently? Financial cycles, austerity, and competitiveness in growth models since the Global Financial Crisis. Review of International Political Economy, 1- 28.
  • Lane, P.R. (2013). Capital flows in the Euro Area, European Economy Economic Papers 497, Directorate General for Economic and Financial Affairs.
  • Lind, D. (2014). Value Creation and Structural Change during the Third Industrial Revolution. The Swedish Economy from a Vertical Perspective, PhD Dissertation.
  • Maroto-Sánchez, A., & Cuadrado-Roura, J. R. (2013). The key role of the productive structure in the countercyclical productivity in Spain, Economics and Business Letters, 2(3):86-93
  • Molina, O., & Rhodes, M. (2007). The political economy of adjustment in mixed market economies: A study of Spain and Italy. Beyond Varieties of Capitalism: Conflict, contradictions and complementarities in the European economy, 223-252.
  • Montresor, S. & Vittucci Marzetti, G. (2011). The deindustrialisation/tertiarisation hypothesis reconsidered: a subsystem application to the OECD7”, Cambridge Journal of Economics, 35(2):401–421
  • Naastepad, C. W. M., & Storm, S. (2007). OECD demand regimes (1960-2000). Journal of Post-Keynesian Economics, 29(2), 211–246.
  • Oberfichtner, M, & Schnabel, C (2019). The German model of industrial relations: (Where) does it still exist? Jahrbücher Für Nationalökonomie Und Statistik 239(1):5–37.
  • Onaran, Ö., & Obst, T. (2016). Wage-led growth in the EU15 member-states: The effects of income distribution on growth, investment, trade balance and inflation. Cambridge Journal of Economics, 40(6), 1517–1551.
  • Pasinetti, L. (1973). The Notion of Vertical Integration in Economic Analysis, Metroeconomica, 25: 1-29.
  • Pérez, S. A., & Matsaganis, M. (2018). The political economy of austerity in Southern Europe. New political economy, 23(2), 192-207.
  • Pérez, S. & Matsaganis, M. (2019). Export or Perish: Can devaluation Create Enough Good Jobs in Southern Europe?, South European Society and Politics, 24(2):259-285.
  • Simonazzi, A., Ginzburg, A. & Gianluigi, N. (2013). Economic relations between Germany and Southern Eutope, Cambridge Journal of Economics, 37: 653-675.
  • Stockhammer, E. (2011a). “Neoliberalism, income distribution and the causes of the crisis”, In: Arestis P., Sobreira R., Oreiro J.L. (eds) The Financial Crisis, Palgrave Macmillan, London: 234-258.
  • Stockhammer, E. (2011b). Peripheral Europe’s debt and German wages: the role of wage policy in the Euro area, International Journal of Public Policy, 7 (1-3): 83-96.
  • Stockhammer, E., Hein, E., & Grafl, L. (2011). Globalization and the effects of changes in functional income distribution on aggregate demand in Germany. International Review of Applied Economics, 25(1), 1–23.
  • Storm, S. & Naastepad, S.W. (2015). “Europe’s Hunger Games: Income Distribution, Cost Competitiveness and Crisis”, Cambridge Journal of Economics, 39: 959-986.
  • Villanueva, P., Cárdenas, L., Uxó, J., & Álvarez, I. (2020). The role of internal devaluation in correcting external deficits: the case of Spain. Structural Change and Economic Dynamics, 54, 282-296.
  • Villanueva, P., & Cárdenas, L. (2021). Unemployment in Spain: The failure of wage devaluation. The Economic and Labour Relations Review, 32(4), 552-574.