Innovations in Manufacturing Industry: East German Enterprises Have Largely Caught up

Innovation activities of enterprises in manufacturing industry and mining in the New Länder hardly differ from those of enterprises in the old Länder. Any differences can be mainly attributed to the varying structure of company sizes.

This was found in the latest innovation survey which the Centre for European Economic Research (ZEW), Mannheim, conducted by order of the Federal Ministry for Education and Research (BMBF). In 1999, the ZEW interviewed in a representative survey approximately 2,500 enterprises about their innovation activities, and also included just under 800 companies in East Germany in the study.

According to ZEW projections, even in 1998 a relatively high number of employees in East Germany was still working in companies that did not implement any innovation activities. This corresponds to nearly 19 percent compared to 12 percent in Germany as a whole. This is explained by the fact that there are hardly any large industrial enterprises in the New Länder. There are no deviations when comparing only the figures of small and medium-sized enterprises. In both the East and the West nearly 20 percent of employees work in non-innovative companies.

In 1998, approximately 64 percent of East German companies of manufacturing industry and mining introduced new or significantly improved products or production methods. With 66 percent, the percentage is only slightly higher for Germany as a whole. Thirty-nine percent of East German companies carry out their own research and development. This is one percentage point more than in Germany as a whole. In 1998, the East German industry spend seven billion DM for investments. This corresponds to approximately five percent of turnover (in the whole of Germany 4.6 percent) or 13,000 DM per employee (in the whole of Germany 16,000 DM). Even though the most important innovation indicators have attained the same level, the catching-up process has not been concluded yet. Enterprises in the New Länder still experience problems in marketing their products. Even though 24 percent of the East German industrial companies launched real market novelties, they only generated 3.5 of their turnover with these novelties in 1998. That is 1.5 percentage points less than the federal average. Innovations in the new Länder are still geared too much toward technical possibilities and not sufficiently towards the requirements of the market.

Contact

Dr. Norbert Janz, E-mail: janz@zew.de