How government could support mid-sized companies

The support of mid-sized companies by German government policy is worth understanding. Canadian government gives grant money to the universities but runs into the danger of rewarding the best paper pushers, not money makers. Germany seems to have managed a balance between mid-sized companies and university research.

Germany is known for its mid- to high-technology manufacturing. While the U.S. has witnessed a decline in manufacturing output as a share of GDP, Germany's has remained steady. By specializing in medium and high technology manufacturing, Germany is able support relatively high wages. The Fraunhofer Institutes in Germany are an important reason for its continued success in manufacturing. The Institutes support manufacturing SMEs by creating partnerships between businesses and universities and encouraging industrially-relevant research in advanced technology areas. The Institutes have a budget of $2.35 billion, with $2 billion of that generated through contract research or publically financed research projects. There are eighty research centers with a total staff of 18,000 qualified scientists and engineers. The expertise and partnerships created through this initiative helped sustain high technology manufacturing in Germany and resulted in a high level of market share for SMEs, fueling broad-based export growth.