German National Economy in Globalization

German companies, similar to American and Japanese companies, have greatly expanded overseas production since the 1990s. However, Germany, unlike the U.S., did not engage in the hollowing-out of domestic production. And unlike Japan, Germany’s domestic production did not result in outdatedness and inertia. This chapter examines how Germany improved domestic production and innovation capabilities, and actually sustained its economic development, despite liberalizing and globalizing trends. German companies have improved their home country’s innovation capabilities in order to strengthen their innovation competitiveness at the global level, through cooperative networks based on industry–university links, between federal and state governments, and the work of the Fraunhofer Society. Germany’s global strategy was built through the active involvement and coordination of many stakeholders, including the state and trade associations.