Understanding the global affiliate structure of German firms: Patterns, shocks and implications

• Applicant: Professor Holger Görg, Ph.D.
• Subject Area: Economic Policy, Applied Economics
• Term: since 2025
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 560017533

After decades of globalization, and research on the optimization of global production structures, we are now concerned about the resilience of such networks. In order to be able to formulate policies, we need to understand how the existing structures endogenously react to shocks. To do so, it is not sufficient to merely look at aggregate country-industry-information. We need to dig deeper and understand how multinationals shift production and investment between places, and how that affects trade patterns (for goods as well as for services), in reaction to shocks. This is what this research project is about. Using detailed and highly novel micro data for Germany, it will chart the organization of global production by German firms. The main part of the project is to investigate empirically what adjustments – if any – firms make to their production structure in the wake of shocks. Given the rise of geopolitical tensions in the last few years, we will particularly look at shocks due to armed conflict or sanctions. The project is particularly concerned with the structure of foreign affiliates of German firms, and will also consider trade performance of such firms. Importantly, we will distinguish trade in goods and in services. This is crucial, given the rising importance of services trade for the world economy – yet this type of trade is often neglected. Germany is an interesting case in point, given that it is one of the most important outward investors as well as one of the top trading nations globally.

• DFG Programme: Research Grants