Reading the headline, you might think that the most urgent question about success in innovation and growth is whether the US or China should get the gold medal. The truth is: Germany wins hands down. Germany does a better job on innovation in areas such as sustainable energy systems, molecular biotech, lasers and experimental software engineering. So, in order to learn effective innovation from Germany, US has encouraged the Fraunhofer Society, a German applied-science think tank, to set up no fewer than seven institutes in America. True, Americans do well at inventing, and have the most sophisticated system of financing radical ideas, leading to impressive results, from Google to Facebook to Twitter. But the fairy tale that the US is better at radical innovation has been shown in repeated studies to be untrue. Germany is just as good as the US in the most radical technologies. What’s more important, Germany is better at adapting inventions to industry and spreading them throughout business. Much German innovation involves infusing old products and processes with new ideas and capabilities or recombining elements of old, stagnant sectors into new, vibrant ones. Germany’s style of innovation explains its manufacturing prowess. For example, many, if not most, of the Chinese products we buy every day are produced by German-made machinery, and the companies that make them are thriving.
From “Why Germany Dominates the US in Innovation”