Germany has managed to keep one of the most stable industrial models in the world, even as global competition intensifies and production shifts to Asia. What often goes unnoticed is what really holds this system together. It is not just large corporations. It is a layer of mid-sized companies. They keep people employed, support stability, and shape export strength. In countries where this layer is missing, industrial growth starts to slow down. Kazakhstan is getting close to that point.
There is a feature in Germany’s economy that is easy to miss at first glance. Yes, the country is highly competitive. Yes, around one fifth of its economy comes from manufacturing. Yes, its export sector is strong. But behind these numbers is not just scale. It is structure.
In this structure, large companies play a key role. Automotive, machinery, chemicals, and pharmaceuticals form the core of industrial output. But around this core sits a dense network of small and mid-sized firms. They produce parts, develop niche solutions, and fill technological gaps. This network is not secondary. It is essential.
In Germany, thousands of companies with fewer than 500 employees lead in narrow market segments. They sell globally. They do not compete on price. They compete on quality and specialization. They are often called hidden champions. This is not a buzzword. It reflects how the system actually works.
These companies rarely make headlines. They do not build giant factories. They do not rush to stock markets. But they are the ones that keep the economy steady. When global demand shifts, large corporations may cut output. Mid-sized firms adjust faster. They are more flexible. They are deeply rooted in specific market niches. They hold supply chains together.
This structure creates two key outcomes. First — stability. Second — depth. The economy does not depend on a single product or sector. Risks are spread out. Value chains become more complex.
These companies do not operate in isolation. They are part of a system. Large corporations act as anchors. They create demand. Mid-sized firms respond to that demand. The relationship is not occasional. It is long-term. The state is not absent from this system. But it does not run companies directly. It shapes the environment. It supports technology. It invests in skills. It connects business with research.
The system works not because one part is stronger than another, but because everything is connected.
Now it is worth looking at the other side. Germany also faces challenges. Spending on research is lower than in some competing countries. Its position in patent activity is slowly weakening. New digital firms are emerging more slowly. This shows that even a strong system is not immune to pressure. But the core remains unchanged. Germany continues to rely on the link between large and mid-sized firms. It does not try to replace one model with another. It adapts what it already has.
In countries where this structure is missing, the picture looks different. The economy splits into two parts. On one side — large projects. On the other — small businesses. In between, there is a gap. This is not just a statistical issue. It is a structural problem.
In such systems, large companies operate in isolation. They import technology and equipment. They do not build strong local supplier networks. Small businesses cannot enter complex value chains. They stay in trade and services. The middle layer does not form.
As a result, the economy lacks depth. It may grow through individual projects, but it does not build a stable base. It remains dependent on external factors. Germany shows a different model. Large companies do not push mid-sized firms out. They support them. They set standards. They create demand. Mid-sized firms adapt to these standards. They specialize. They become part of global value chains.
The state does not focus only on large business. It supports specific technologies. It runs targeted programs that help companies grow in selected areas. This is not broad support. It is focused.
Mid-sized firms benefit from this approach. They gain access to technology. They gain access to knowledge. They reach markets through larger companies. Their growth accelerates. But this alone is not enough. Skills matter. In Germany, education is closely linked to industry. Companies are involved in training. They define what skills are needed. This reduces the gap between education and the labor market.
In countries without this link, a different problem appears. Companies cannot find the right workers. Graduates cannot find jobs in their field. This slows growth. Germany deals with this through cooperation. The state, business, and education work together. This is not a one-time effort. It is ongoing.
Another key element is innovation. Companies work closely with research institutions. They co-develop technologies. This speeds up adoption. In this system, mid-sized firms do not fall behind. They become part of the innovation process. They develop their own solutions. They enter new markets.
Now back to Kazakhstan. The economy has long been driven by large projects. This is understandable. Large projects bring quick results. They attract investment. They create jobs. But this model has limits. It does not build dense networks. It does not create a middle layer. It does not add depth.
When a large project faces trouble, the whole system feels it. There are not enough companies to absorb the shock. The system lacks resilience. Germany shows that stability does not come from size. It comes from structure. Mid-sized firms play a central role in that structure.
Another important point. These companies do not appear on their own. They need the right environment. They need predictability. They need long-term direction. In Germany, this direction is shaped through coordination. The state brings stakeholders together. It sets strategies. It defines goals. This reduces uncertainty.
Companies understand where the sector is heading. They invest accordingly. They specialize.
Where such direction is missing, companies behave differently. They avoid long-term investment. They focus on short-term gains. This limits growth. Another factor is competition. In Germany, public support is delivered through market-based tools. Tenders are used. Firms compete for access. This improves efficiency.
Mid-sized firms are not pushed aside. They have a chance to participate. This supports balanced growth.
In systems without such mechanisms, support often concentrates in a few hands. This increases imbalances. It limits opportunities for mid-sized firms. Germany also highlights the role of regions. Policy is not only national. Regional authorities are active. They allocate resources. They support local projects.
This allows for flexibility. It strengthens local supply chains. It supports mid-sized firms.
In highly centralized systems, this flexibility is limited. Growth slows down. There is also an interesting detail. For a long time, Germany did not label its approach as industrial policy. It simply applied different tools in practice. This helped avoid endless debates and focus on action.
Only recently has a clearer strategy emerged. It focuses on supporting large firms and developing new technologies. But the foundation remains the same. Coordination and connection. In Kazakhstan, diversification is often discussed. But diversification does not come from isolated projects. It comes from structure. Mid-sized firms are central to that structure.
Without them, the economy stays shallow. It produces, but does not build complex value chains. It exports, but does not control markets.
Germany shows that control comes through specialization. Mid-sized firms take narrow niches. They become hard to replace. This creates stability. This model takes time. It requires patience. It requires consistency. But it delivers results.
The global economy is becoming more complex. Competition is rising. Technology is changing faster. In this environment, resilience becomes critical. Countries that rely only on large projects face limits. Countries that build a strong middle layer gain an advantage.
Germany is not perfect. But its model works. It shows how to build a resilient system. Kazakhstan is at a crossroads. It can continue strengthening its current model or shift its structure. The first path is easier. The second is harder. But the second brings long-term results.
Mid-sized business does not attract as much attention as large projects. It does not deliver quick wins. But it builds the foundation. An economy with a strong middle layer is more resilient. It adapts faster. It handles shocks better.
Germany shows that such a layer can be built. But it takes coordinated effort. It takes consistency. It takes a long-term view.
Alen Serik, expert of the portal EconomyKZ.org
