ICT and the Mineral Sector in Germany
A German industry that stood out amongst a diversified landscape of sectors was the ‘Information Communication and Technology’ (ICT) sector as it represented 11.63% of gross trade flow and 4.36% of net trade flow. It stood out particularly because it was ranked the highest in gross trade flow, which is useful for understanding the total volume of trade, including all goods and services that cross borders. I did not know that Germany had such a big IT industry, and I am surprised that it represents such a substantial portion of the gross trade flow. ICT is also experiencing a relatively high growth number of 7.42% per year, which is significantly faster than the growth of the vehicle industry which is growing at 0.12%. Upon further research, it is clear Germany is experiencing high growth in the ICT sector due to several contributing factors. There is a robust demand for smart data products and services in the cloud, driven by the country’s comprehensive digitalization program which is transforming the economy. Germany is home to the largest software market in Europe and a strong demand for U.S. ICT products and services, with major global players having a significant market share alongside a thriving environment of small and medium-sized enterprises. The Strategy Space divides sectors into broader industry categories that are more generalized. This page highlights the following industries: electronics, vehicles, metals, and minerals indicating that they are substantial industries within Germany. While ICT is a relatively new, and rapidly growing space within the landscape of German industries, I wanted to explore a much more traditional industry that was far more prevalent in Germany’s past. Germany’s mineral industry is far removed from ICT, however, understanding its history in the development of the country and learning about the way it contributed to the nation’s prosperity can provide valuable insights into its economic evolution. The historical significance of Germany’s mineral industry cannot be overstated. It not only fueled economic growth and technological advancements but also laid the groundwork for Germany’s emergence as a prosperous and industrialized nation. While ICT now takes center stage, understanding the roots of the mineral industry is crucial to appreciating the diverse economic journey that has brought Germany to its current standing on the global stage.
The minerals sector has historically been an important part of the German economy, with Germany being a major producer of bituminous coal and brown coal, along with minerals like salt and potash. The mining and processing of copper ores in the Mansfeld area of eastern Germany was a long-standing tradition, although the mining of most metallic minerals ceased in western Germany for economic reasons before unification. Despite having relatively few domestic natural resources and importing most of its raw materials, Germany has managed a strong manufacturing industry, which represents a significant portion of its GDP. While less impactful on the overall sector in today’s modern economy, Germany’s mineral sector, particularly its coal mines, had once played a pivotal role in providing the necessary energy resources to power the nation’s manufacturing sector.
Germany’s mineral sector became prominent in exports largely due to its substantial production of coal and its strategic use in energy-intensive industries. Coal provided a competitive advantage in energy costs, enabling the growth of manufacturing sectors like steel production, which became significant exports. As German technology advanced, the country also began exporting mining machinery and equipment. The chemical industry, bolstered by domestic potash and salt, produced fertilizers and other chemical products that gained prominence in international markets. In 2022, mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes amounted to 3.65% of total exports from Germany. The exportation of these goods has been supported by Germany’s strong focus on innovation, quality, and efficiency within the mineral extraction and processing industry. The future of this industry looks exceptionally promising, as Germany has been supporting critical minerals-rich countries build processing capacity. German Chancellor, Olaf Scholz, delivered a speech on April 16, 2023 discussing this at annual industry trade fair in Hanover. He stated that Berlin is trying to rebalance its relationship with China and reduce reliance on Asia’s powerhouse for key inputs, such as nickel and other critical minerals. The following quote expresses his sentiment on the matter: “If we succeed in locating more processing steps where the raw materials are in the ground, then that will not only create greater local prosperity … we will ensure that we have more than just one supplier in the future.” As Germany has slowly depleted much of its mineral resources, it is looking to build critical infrastructure in other countries to foster new strategic trading partnerships. This strategy will benefit all parties involved and help to ensure a positive future for Germany.
Sources:
Reuters. “Germany to Support Critical Minerals-Rich Countries to Build Processing Capacity.” Reuters, 16 Apr. 2023, https://www.reuters.com/markets/commodities/germany-support-critical-minerals-rich-countries-build-processing-capacity-2023-04-16/.
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