THE EURO´S UNEVEN BENEFIT IN EUROPE / THE NEW YORK TIMES ( RECOMMENDED READING )

December 17, 2010

The Euro’s Uneven Benefit in Europe

By FLOYD NORRIS

THE euro has been good for German exporters, and seems likely to get even better in the coming year. It has also been good for the Netherlands, which was the fourth-largest exporter in the euro zone in 2000 and now ranks second. But France and Italy suffered during the last decade as their shares of euro zone exports declined.


The relative changes are shown in the accompanying charts (click here) which detail the shares of the four major countries in total exports of the 16 countries now in the euro zone, from 2000 through 2009.


German exports account for more than a quarter of the trade within the euro zone, and rose during the last decade. Its share of exports by euro zone countries to the rest of the world is even larger, and has been growing more rapidly. It now is at 36 percent.


Creating a large area with a common currency was supposed to stimulate trade within the zone because companies could sign contracts without worrying about currency changes, just as companies in Massachusetts can deal with firms in California.


That effect does seem to have helped some countries that joined the euro during the decade, particularly Slovenia and Slovakia. Neither is a large exporter, but their shares of the total have risen sharply in recent years.


The export share of Ireland, an original member, fell as its economy came to be based more on a property boom and less on manufacturing. Exports have begun to pick up, after the crash forced wage cuts and a new emphasis on trade.


Greece’s exports, also small, lost market share during the period as costs rose. Spain held its own, and while Portugal lost market share within the euro zone, it gained a little on exports to other countries.


Europe’s economic growth lagged during much of the last decade, and the figures show that exports to countries outside the zone rose faster than exports within the zone. In 2000, the euro zone countries shipped 1.06 trillion euros in products to one another, worth about $975 billion at then-current exchange rates, and just 999 billion euros worth to other countries. By 2008, the figures were 1.55 trillion euros, or about $2.3 trillion, for trading within the zone, and 1.57 trillion for exports outside. In 2009, both figures fell by about 18 percent, but the decline in trade within the zone was slightly larger.


The figures are based on a new statistical yearbook released by Eurostat, the European Union’s statistical agency, giving details of bilateral trade for members of the E.U.


The changing exports of the major countries reflect to some extent the changing competitiveness of countries during the period. Costs rose more rapidly in some countries than others, hurting exports and encouraging imports.


France’s share of exports within the euro zone fell to just 13.4 percent in 2009, from 17 percent in 2000. Italy’s share fell to 10.1 percent, from 11.9 percent. Italy used to periodically improve its competitiveness by devaluing the lira, but such a move is not possible now that it uses the euro.


Germany may be in position to continue gaining market share. The well-publicized problems confronting some European countries — caused, in part, by their lack of competitiveness — have infuriated Germans who fear they will have to pay for bailouts. But those problems have also cut the value of the euro relative to the dollar and other currencies, and thus made German exports even more competitive.