Improving Methods for Policy Analysis of Foreign Trade and Investment

Since the beginning of the millennium, Germany has greatly expanded its global economic integration through exports, imports and direct investment, which has promoted growth and employment, but has also required adjustments. The research project ‘Methodological and analytical strengthening in current issues of foreign trade and foreign investment policy’ was commissioned by the BMWK to analyse new approaches to improve foreign trade policy analysis.

Key results of the project include the development of two data sets: the AFiD panel of foreign trade statistics, with detailed information on exports and imports at company level, and the AFiD panel of company structure statistics, which provides insights into cost and investment structures. For the first time, data from the Federal Statistical Office and the Deutsche Bundesbank were also linked, enabling new analyses of trade in goods, direct investment and trade in services.

Modern simulation models were used to analyse the effects of trade policy measures such as the EU-South Korea free trade agreement, the Russia sanctions and global decoupling. In addition, empirical causal analyses were carried out on the effects of Brexit, offshoring and foreign takeovers on German companies.

The results provide valuable impulses for a resilient economic policy and the targeted design of political measures. Further details can be found in the final report.