>'In this case, they could encourage European competitors to YouTube by using their services and infusing them with some capital. By digitalizing the processes

>'In this case, they could encourage European competitors to YouTube by using their services and infusing them with some capital. By digitalizing the processes across the union, and by again, using European services.' Capital infusions have a troubled history, as they've often been used for political payoffs to companies with dubious prospects (Solyndra). I'm also not sure the government will choose 'the right ones', as their criteria may not match those of the consumers, which will lead to specialty government contractors (like US ship construction since the Jones Act). >" Because Germany is big in Pharma, they encourage the pharma industry along with its research and development." This seems to be a typical failure mode of government, they encourage & subsidize existing, visible industries, and ignore/tacitly punish 'up & comers'. The film industry is a typical example of the subsidies, and software is a classic example of the neglect. >"Maybe my understanding is wrong, but I feel like a lot of innovation comes from heavy government-backed entities. And then the capitalists come and distribute these innovations in various forms to the population. " I think this depends on how you frame the issues; for example, you could say that ARPAnet was the progenitor of the internet, or you could say that 'cisco' was the real innovator. I tend to view 'true innovation' as transforming a niche or speculative idea into something widespread and common, but that's not a universal perspective.