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Government Investment in Manufacturing and Innovation

2013 Global Manufacturing Competitiveness Index


A number of factors were noted by 2013 GMCI participants as critical in evaluating a country’s overall competitive advantage with respect to government investment in manufacturing and innovation. Primary among them was the number of public-private collaborations, followed by investments in technology, research and development, and engineering.

Countries that lead in developing public-private collaborations not only bring together the skills required to spur innovation, but also create an ecosystem that thrives on innovation through collaboration. China and Germany, which place heavy emphasis on creating public-private partnerships, were ranked by 2013 GMCI survey respondents as being most competitive among the six focus nations of the study. 

Take for example, the Fraunhofer Society in Germany, which is a leading example of public-private collaboration. Fraunhofer is Europe’s largest applied-research oriented organization and aims to transform scientific findings and basic research into useful innovations to further economic growth and job creation. Founded in 1949, Fraunhofer receives approximately 40 percent of its funding from the public sector and about 60 percent from contract research earnings; and it operates between application-oriented fundamental research and innovative applied research and early stage commercialization development projects.

The Industrial Technology Research Institute in Taiwan (ITRI), which received 50 percent of the funding from government, was developed with a similar mission and model as the Fraunhofer Society. ITRI describes itself as a national research organization, with a mission of conducting technological research, promoting industrial development, creating economic value, and improving social welfare for Taiwan. Today, ITRI is Taiwan’s largest applied technology R&D institution. ITRI has continued to evolve since its inception in 1973 and is now spearheading original and innovative industrial research, transfer of technology and product developments, thereby proliferating domestic and international industries.

These two examples highlight key reasons why Germany and Taiwan both are recognized among the top 10 most competitive nations as ranked by executives responding to the 2013 GMCI survey. In stark contrast, India and Brazil trail on government investments in manufacturing and innovation. Being ranked among the top 10 competitive nations overall, India and Brazil may ultimately need to become more involved in public-private partnerships in the future.

2013 Global Manufacturing Competitiveness Index

Main page: Return to the 2013 Index overview
Continue reading: Country analyses, appendix A

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