Would Mittelstand make America great again?
Unlikely, as it takes factors such as business culture and government support to make the German system successful.
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K Ravi Kumar & Subrata Chattopadhyay Banerjee
IN the past decades, US economic growth has been achieved by driving down costs through outsourcing and by keeping wages low through globalisation. A harsh lesson learnt during the 2008 crisis was that lowering costs alone cannot fuel the economy. In May this year, manufacturing's share of employment in the US fell to 8.48 per cent, the lowest ever since the Labor Department first began keeping records in 1940. In a recent article (Financial Times, June 26, 2017, Rana Faroohar, "Why US big business listens to Bernie Sanders") CEO of GE Jeff Immelt opined that one could learn from the German Mittelstand.
Germany was the world's second largest exporter in 2016. Its export of products and services accounted for more than one third of its national output. In the last 20 years, Germany is the only OECD nation that has held on to its proportion of world trade, while the US's and Japan's share of the pie shrank. What is Germany doing right?
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