Benz: Economically Intertwined
The Atlas of Economic Complexity by Harvard gives economist the ability to break down countries based on economic structure, market dynamics, as well as strategy space by country. When analyzing German’s economic structure, there are several key components that stand out in the export basket for 2020. The largest by percentage is ICT with 11.58%, followed next by cars at 7.09%. Germany’s export products are in total worth $1.70 trillion USD, and has grown about 1.2% annual over the past five years. This is tremendous growth in its export economy, which has outpaced the other segments of the economy. When looking at export complexity, which can be defined as how simple or difficult manufacturing processes are in production of the export product, we see that machinery and motor vehicles require a high amount of complexity in comparison to export products like services, even though they make up a brunt of the capital produced.
The second component of the Atlas is market dynamics, which can be further broken down into three subsections: export growth dynamics, growth in global market share, and diversification in new products. Export growth dynamics gives information of the product sectors displayed on a cartesian graph, with product complexity again on the x axis and annual export growth (increase/decrease) on the y axis. The most complex and increasing products appear again to be industrial machinery with the addition of pharmaceutical products. Growth in Global Markets appears to yet again be dominated by vehicles and machinery, followed close by chemicals. Diversification into new products is dually dominated by worked cereal grains and other floating structures.
The third component strategy space breaks down product sectors in relation to other product sectors and their interrelation. Germany’s product space is highly connected, as cars remain of the highest, they are directly tied with parts of motors, which further stretches to other webs of the economy.
I took particular interest in the vehicle and car market due to personal interest in automotives. The sheer complexity and interwovenness of the Germany automotive industry starts from the very first car ever made. Karl Benz in 1885 made the first one-cylinder two stroke engine, a two seater vehicle which grew to the legendary automotive brand we know today as Mercedes Benz. Sales of the new Model 3 took off, and Benz looked at improving the vehicle with its newly patented double-pivot steering system into 1893. While the automotive brand stagnated during World War II, from 1949 to 1960, the fast expanding Germany automotive industry Daimler-Benz AG succeeded into regaining the position of a world leader, as the company cracked the Billion dollar mark in turnover and sales. It can be said that without the invention of the first automobile by Karl Benz, Germany’s automotive industry would not be as classic or as powerful as it is today.
Auf Wiedersehen und alles Gute!
Max Rajendran
