Leadership is usually the sticking point for any small country trying to become a major power. You only get a tiny sliver of it by conquering, and most of the techs that boost it are percentage-based, so if you have a small base, the benefits of the techs are miniscule.
Germany, with something like 30 points to start, can research Education and get a 5% increase, which is 1.5 additional Leadership. That 1.5 points will recoup the 1 point spent over the span of close to a year to research education in only 8 months, and after that, it's all profit. A smaller country with 7 points will only see a 0.35 point increase, and will take close to 3 years to recover the investment. Worse, since Germany has a significantly larger manufacturing base to generate higher Practical values, it actually pays considerably less for some of its research. Germany then gets the on-map Leadership of both Austria and Czechoslovakia as cores, which means it gets 100% of that Leadership. Anything you conquer as a non-core province only provides a small fraction of the benefit to you (as in 10-20%, depending on occupation laws).
In one game, playing an absurdly bloated and overpowered Hungary, I managed to take almost the entire Balkan peninsula (YUG, ROM, BUL, most of GRE), invaded and annexed the Vichy portions of France after the Fall of France, and eventually invaded and annexed just about the entire British Isles (all except for 3 "empty" UK provinces which Germany invaded and occupied at the last minute), plus several other countries, giving me over 200 base IC, and my Leadership was STILL a bit less than that of Italy.
In short: once a minor, always a minor.