But how do you accomplish this? Where do you get the money from? Nobody wants to invest in Germany, not even the Germans themselves. So the government tries to jump start investment, but the government is both incompetent and corrupt, so for example the German government bet on Quantum Computing instead of AI. Now the government in investing in AI, but instead of investing in LLMs they are investing in "AI for science" projects, 99% of which are complete deadends. Actually this is a sort of theme. The government funded startups are always doing some sort of "science" based product. For some reason this appeals to the founding agencies because science sounds like a solid investment. But most of these startups are either attacking a problem that is way too improbably of yielding any results, or they are projects that sound good to the uninitiated but are actually fundamentally flawed when you actually dig deep into them (like a lot of AI for science crap).
I think, if there is a way forward, it's for the government to stop trying to be a startup accelerator. They are too incompetent and corrupt for that. Instead, it should be a mediator between foreign investors and local talent. Make it attractive to build in Germany and use local talent to do that. And make sure the local talent gets competitively compensated so they do not emigrate.