ifo Institute: Germany Hardly Dependent on Non-European Countries for Medical Goods

“There is no empirical evidence to support the suggestion that Germany is at the mercy of globalization when it comes to the trade in medical goods,” write ifo economists Martin Braml, Feodora Teti, and Rahel Aichele in an essay for ifo Schnelldienst. “On the contrary, Germany continues to play an important role in global medical goods trade.”

The authors argue in favor of creating a national stockpile of medicines to prevent medical supply bottlenecks: the stocks must be sufficient to last at least until the domestic economy can itself ensure the supply of necessary medical goods in the event of a crisis. “The EU should refrain from protectionist measures in order to ensure global free trade,” Braml, Teti, and Aichele explain. The authors also advocate the permanent setting of EU import duties on all medical products to zero.

“For imports, the number of sources of supply is more important than the question of whether a product is produced domestically or imported,” the authors explain, adding: “As the number of suppliers increases, dependency decreases; with a sufficiently high number, supply can even be more stable than through domestic production alone.”

“Germany obtains almost two-thirds of its imported medical goods from 31 or more countries, which implies a high degree of diversification in the procurement of these products,” the ifo economists write. Germany sources 72 percent of its pharmaceutical imports from EU member states. Outside the EU, the major exporters of medical goods to Germany are the US, Switzerland, and the UK.

Pharmaceutical imports from China and India together amount to EUR 409 million euros, which is 0.8 percent of Germany’s total pharmaceutical imports. “This refutes the claim that Germany is basically dependent on imports from Asian countries,” the authors note.