Research and Innovation

Research, development and innovation form the basis for Germany‘s prosperity and competitiveness.

Research, development and innovation form the basis for Germany‘s prosperity and competitiveness© gettyimages | Foto: NA

Research, development and innovation form the basis for Germany’s prosperity and competitiveness. Viable solutions for environmentally friendly energy, efficient health care, sustainable mobility, secure communication and secure production in Germany cannot be developed without progress in science and technology. The challenges Germany is facing are shared by other countries in Europe and around the world.

Germany has invested more funds in research and development (R&D) in recent years than ever before. The Federal Government’s expenditure on R&D rose by 9 billion euros between 2005 and 2018 to 17.3 billion euros in 2018. This represents an increase of about 92%. Between 2017 and 2018, the R&D expenditure of German industry increased by about 4.8% to 72.1 billion euros. Government and industry together spent 104.7 billion euros on R&D in 2018. This represents 3.13% of Germany’s gross domestic product (GDP). This means that Germany again achieved the target of the Europe 2020 strategy of spending an annual 3% of GDP on R&D, as it already did in 2017.

Germany accounts for 31% of all R&D expenditure in the European Union (based on the EU28); six of the ten most innovative companies in the EU are from Germany. Germany features as one of the world’s leading locations of innovation in international ranking exercises. The European Innovation Scoreboard of the European Commission places Germany in the group of Strong Innovators, and the Global Innovation Index also puts Germany among the leading countries. Germany is also a worldwide leader in patent applications. Germany accounts for nearly twice as many patents with world market relevance per million citizens as the USA. Germany’s good international position in terms of its excellence rate, which shows what proportion of its published research results are among the most cited, has been improving continuously in recent years.

Over the past decade, Germany’s share of world trade in research-intensive goods has remained stable. In 2018, Germany’s share was 11.5% and thus higher than the USA’s at around 10.8% and considerably higher than Japan’s at just over 6%. Germany is also a leader among European countries in this trade.

It is essential to consider future trends and challenges in order to maintain Germany’s strong international position in the long term. Digitalization is a decisive factor in this context as it offers new opportunities for fields of application such as artificial intelligence and human-technology interaction. A return to stronger participation in innovation by small and medium-sized enterprises (SMEs) is another important goal. With this in mind, tax incentives for research and development were introduced on 1 January 2020. The idea is to strengthen Germany’s competitiveness in innovation and to stimulate research, particularly by SMEs.