Innovation Indicator 2018 – No Progress for Germany

Compared against the 35 most innovative economies around the world, Germany currently ranks fourth, as in the previous year, behind the leading countries Singapore, Switzerland and Belgium. The good position of the German innovation system is based on a well-balanced performance in all five main pillars of innovation, although Germany has been unable to reach a top position in either of them, coming in 9th in industry, 10th in science, 10th in education, 8th in government, and 12th in society. A lack of openness has been identified as a weakness of the German innovation system, with a separate indicator on openness ranking the country as only 21st.

These are the key findings of the Innovation Indicator 2018, carried out by the Centre for European Economic Research (ZEW), Mannheim, and the Fraunhofer Institute for Systems and Innovation Research (ISI) on behalf of the Federation of German Industries (BDI).

The innovation indicator analyses and compares the strengths and weaknesses of the countries’ innovation system on the basis of 38 individual indicators. One of Germany’s major strengths is the knowledge transfer between companies and public research. The overall result shows that Germany performs particularly well in terms of higher education, the number of researchers as well as corporate expenditure on research and development.

Germany shows room for improvement in terms of openness to innovation

However, the gap between the German innovation system and the leading nations is widening since Germany scores poorly in terms of secondary qualifications and doctorates, education expenditure, learning success at school and employment in the knowledge-intensive services sector. In addition, companies are missing tax incentives for research and development.

Germany’s rather weak performance reflects a lower level of international cooperation in science and a less open society as compared to small and highly innovative countries such as Switzerland, Ireland, the Netherlands, Austria, Singapore and Sweden, who lead the ranking in terms of openness. This is only partly compensated by strong trade links and foreign investments of the German economy.

“Germany strongly depends on innovation in order to cope with major challenges posed by both demographic and climate change,” says Dr. Christian Rammer, deputy head of the ZEW Research Department “Economics of Innovation and Industrial Dynamics” and project leader of the Innovation Indicator survey at ZEW. “The results of the latest innovation indicator also make it clear that there is still plenty of room for improvement when it comes to Germany’s openness to innovation in all areas of the innovation system.”

About the Innovation Indicator

The annually published Innovation Indicator is a study which compares countries in terms of their innovation performance. The study analyses the conditions for innovation in Germany and develops a ranking which compares Germany to other leading industrial nations and emerging countries in terms of industry, science, education, government and society, as well as in terms of an overall indicator.