Only about 1.1% of the world population is German. However, 48% of the mid-sized world market leaders come from Germany. These firms, which I call “Hidden Champions,” are part of what makes German economic growth more inclusive: by my calculations, they have created 1.5 million new jobs; have grown by 10% per year on average; and register five times as many patents per employee as large corporations. And they are resilient: my estimate is that in the last 25 years no more than 10% of them disappeared or were taken over, a distinctly lower percentage than for large corporations. Nearly all of them survived the great recession of 2008-2009.
Why Germany Still Has So Many Middle-Class Manufacturing Jobs
Midsize companies create more inclusive growth.
May 02, 2017
Summary.
48% of the mid-sized world market leaders come from Germany. These firms create jobs, grow GDP, and are disproportionately innovative. Thus it’s no surprise that policymakers and economists in other countries have cited the German Mittelstand as a model for inclusive growth. But the Germany’s mid-sized champions are the result of a complex network of factors, many of them historical, which are hard to copy. For example, until 1918, Germany consisted of 23 monarchies and three republics, which forced entrepreneurs to internationalize early on in a company’s development if they wanted to keep growing. Germany today still has a strongly international mindset. Some factors, however, other countries could try to copy, such reforming taxes and investing more in vocational training.