One of the main targets of recent adjustment projects throughout the Euro periphery have always been the reorientation of production towards exports and an export-led recovery. Yet when analysing trade and external balance developments one must always pay attention on using the correct metric. A large contraction of domestic demand will almost surely lead to a fall of imports and an improvement of the current account balance. An increase of external demand even with a constant export income elasticity of demand will mechanically lead to an increase in exports. Yet none of the above suggest a rebalancing of production towards exports or a structural improvement of cost/quality competitiveness.

One metric that can avoid some of the above problems is the share of world exports. If that remains stable yet exports increase then this fact points to an increase of external demand, not of export penetration. On the other hand, an increase in export share will mean that a country is able to increase its exports more than the change in total world exports and gain competitiveness compared to other countries (whether this is a zero sum game is another story).

Looking into Euro exports through these lens makes it clear that no country (except Ireland and only for 2015) has been able to materially increase its (goods) export share compared to 2010:

  Euro share of world exports 2010 - 2015.jpg

As a result, the 20-30% rebound in real exports compared to 2010 is most probably a function of movements in external demand than of any structural changes in product quality, prices or mix:

euro-real-goods-exports-2010-2015-base-2010

Taking a more long-term view one can examine how the export share evolved since the introduction of the Euro. A small caveat is that export shares precision is two digits so they are not able to catch small movements in the case of countries such as Greece and Portugal with exports shares around 0.17 or .40.

euro-share-of-world-good-exports-base-2002

and

euro-share-of-world-services-exports-base-2002

Starting with goods exports share the data show that only Germany and Greece managed to maintain or increase their share until the Great Recession. Even Ireland saw a large decrease of its share during that period. During and after the Great Recession no country managed to increase its 2008 share (I am disregarding the Irish exceptional data point of 2015). This suggests a structural deterioration which was clearly not alleviated by the adjustment programs undertaken since 2011.

Regarding services exports share we observe a clear, stable upward trend for Ireland which managed to increase its share by 53% until 2015, a development which is surely closely correlated with its role as a tax avoidance hub. Germany, Greece and Portugal all managed to roughly maintain their 2002 share until 2008 while the rest witnessed a strong decline.

During and after the Great Recession we witness a substantial decrease in shares for most countries with the most pronounced decline being the one for Greece. The Greek services exports share managed to fall almost at half its 2008 level by 2015, a development that is most probably related to the large drop in shipping revenues during the corresponding period.

Overall, export share data do not suggest any actual structural adjustment in periphery countries in favor of exporting industries. On the contrary, services exports (with the exception of Ireland) have clearly deteriorated while goods exports only marginally maintained their shares. Any exports gains seem to have only been a function of autonomous external demand movements rather than structural in nature.

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