External publications

Germany’s manufacturing industry success – lessons for industrial policymakers

Altenburg, Tilman
External Publications (2020)

HDI Policy Brief 3 (2), Abidjan: African Development Bank

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Germany stands out in Europe for its highly competitive manufacturing-led economy. This is at least partly a result of successful industrial policies. This Policy Brief identifies six policy factors that have strongly contributed to Germany’s strong  industrial development: (1) It has a long tradition of bringing societal actors together to agree on long-term roadmaps for coping with systemic transitions and coordinate strategic actions; (2) it has strong institutions for supporting specific  technologies (rather than limiting itself to ‘horizontal’policies); (3) it has a corporatist tradition, whereby employers and unions negotiate conflicting interests until a consensus is reached; (4) public-private cooperation is strong with regard to skills  development; (5) firms are well-embedded in the National Innovation system: and (6) supporting public institutions act in a business-like manner using competition-based incentives. But there are also examples of policy failure. Germany is falling  behind some of its main competitors in terms of investments in science and innovation, especially in core technologies for a digital and carbon-free future; it has no convincing strategy for coping with technological and market trends that are excluding ever larger parts of the labour force; and there are serious and costly cases of policy capture by large multinational corporations. Although Germany is a high-income country with an enormously diversified economy, its industrial policy experiences  hold important lessons for other, including low- and middle-income, countries, for example: how public agencies can orchestrate societal dialogues to develop shared visions and translate them into practical strategies; how state-business  collaborations are encouraged in many ways, and how tenders and other market mechanisms are used to make public services for economic development more efficient.