The globalisation of German industry after the Bretton Woods collapse

The collapse of the Bretton Woods system of fixed exchange rates brought a strong revaluation of the German mark by 55 per cent within a decade after 1968. This result should have especially burdened German exports, which were the backbone of the country’s economic strength in the 1960s. However, Germany experienced an export boom after 1973 and became increasingly world-market-oriented thereafter. The article explores the explanations for this unexpected development. First, it discusses Germany’s real effective exchange rates to understand the real effect of the currency turbulences on German business. Geographic redirection of trade flows are dealt with in a second step. Finally, the article shows that combined industry and economic policy used the monetary shock to broadly restructure production processes towards offshoring. Ultimately, this approach secured German industry’s export strength and the country’s strong orientation towards exports and export surplus.