Strategic Undervaluation: The History of Germany’s Export Orientation

This paper traces Germany’s export surplus orientation from the 1950s onwards. Export surplus orientation is an extreme form of export orientation. National economies are export surplus oriented when they have the institutional and organizational capacity and the political willingness to put themselves into real undervaluation constellations and to remain there over long periods of time. The extent to which the capacity and willingness to do so translates into surpluses depends on the flexibility and management of the currency regime. The export surplus orientation of the Federal Republic of Germany is, as the paper demonstrates, much older than the euro. The regime has been largely in place since the early 1950s, both with regard to its institutional and organizational capabilities as well as with regard to the political motivations of its dominant social bloc including the export sector trade unions, and it survived until the euro provided the perfect environment for its current radicalization.