In addition to booming exports, a high employment rate and its innovative Mittelstand (SMEs), Germany’s fragmentation is a major contributor to its economic success. Decentralization has prevented the emergence of a prosperity gap within the nation. Almost every state has at least one area of high economic and entrepreneurial productivity. The heart of the maritime industry beats in northern Germany, big IT and high-tech companies have settled in and around Munich, and a dynamic start-up scene is booming in Berlin. In the eastern states, too, a highly innovative Mittelstand has developed since Germany’s reunification.
Two thirds of Germany’s SMEs and at least half of its 2,700 “hidden champions” (our world-leading SMEs) are based outside the urban areas. For example, BHS Corrugated Maschinen- und Anlagenbau, the world’s largest supplier of solutions for the corrugated board industry, is located in Weiherhammer in Upper Palatinate, a town with less than 4,000 inhabitants. In the age of digitalization, location is not as important as it was 20 years ago. The prerequisite for success is optimal infrastructure, beginning with transport connections and extending to a super-fast broadband connection. And this continues to be a huge problem in Germany. Politicians must support the Mittelstand through investment-friendly framework conditions, so that success can continue to be achieved in decentralized way.