Challenges facing the USA in matching Germany in advanced manufacturing for green growth

Abstract

This study explores the relative strength of public policies promoting advanced manufacturing by comparing the government programs and capacities of two world leaders in science and technology: the USA and Germany. Based on insights from 'varieties-of-capitalism' literature and using process tracing methodology, this study identifies significant differences in today's pursuit of advanced manufacturing. The German model of Rhine capitalism has strength due to its long tradition of diversified quality work, built on a long-term commitment to government-industry collaboration, with significant indirect public support provided by vocational training and research institutes. The American model of Manchester capitalism has been challenged by the loss of millions of low-skilled manufacturing jobs due to outsourcing and competition from Asia. The study finds that the “Manufacturing USA” policy initiative of the Obama era, although directly inspired by Germany's Fraunhofer institutes, is hampered by the contextual and institutional circumstances identified. With biobased carbon fibers offering the potential of a novel, low-cost material, pursued with research and development (R&D) efforts in both countries, it provides a measure for evaluating policy outcomes, and the study confirms Germany's technological lead. In addition, the study's process-tracing methodology reveals that significant legacies from German knowledge creation in the past have spilled over to American science and technology, and may continue to do so, lured by government funds. Further studies on advanced manufacturing should test the robustness of these findings.