New study: expenditure on development cooperation creates prosperity and jobs in Germany

• Every euro increases exports made in Germany by EUR 0.36 – securing 139,000 jobs in Germany
• Positive side effect of funds for combating global crises and international aid
• Close partnerships and local presence extremely important for Germany as an economic centre

Development cooperation expenditure creates prosperity and jobs in Germany. This is the conclusion of a recent paper from the University of Göttingen for KfW. The analysis examines the relationship between German development cooperation payments and German goods exports to the associated recipient countries.

The calculations show that German goods exports increase by EUR 0.36 for every euro of development cooperation output. The researchers explain the effect firstly by income effects in the recipient countries, as these increase local demand and imports. Secondly, cooperation creates network effects that can be explained by goodwill and habits: 'Made in Germany' is becoming better known in the partner countries and invokes positive associations.

On average, from 2013 to 2023, German development cooperation increased the exports of goods from German companies by USD 8.8 billion (EUR 7.9 billion) per year. This does not take into account service exports, which, according to the authors’ observations, increased very sharply due to the lack of available data to date.

According to the study's authors, close to 89,000 jobs in manufacturing companies in Germany can be attributed to bilateral German development cooperation. A further 50,000 jobs in the service sector are accordingly linked to the increase in goods exports. In total, development cooperation secures 139,000 jobs in Germany.

Christiane Laibach, Member of the Executive Board of KfW said,

"German development cooperation combats global crises and improves living conditions in the partner countries – and has verifiable positive effects for the German export industry. This is a positive side effect of development cooperation. The instruments strengthen international links even in times of crisis. With emerging economies in particular, a close partnership and a local presence are extremely important for Germany as an economic centre. Investments in sustainable infrastructure and climate action improve the market opportunities of German companies in the partner countries."