Innovation Indicator 2017: Germany has improved, but is still only average when it comes to digitalization

Fraunhofer ISI together with the Center for European Economic Research (ZEW) have compiled the Innovation Indicator 2017 on behalf of acatech - the German National Academy of Science and Engineering - and BDI - the Federation of German Industries. The Indicator ranks Germany in fourth place in the international innovation landscape. Despite scoring so well, there is still a large gap between Germany and the innovation leaders Switzerland, Singapore and Belgium. Germany shows clear weaknesses, especially in digitalization, which was analyzed for the first time by the innovation indicator 2017: Germany is only ranked 17th here and lags far behind other industrial nations like the US or Great Britain.

In an international comparison of innovation, Germany remains one of the leading countries, but doesn’t make the top three. This is the result of the Innovation Indicator 2017, which has analyzed the innovative strength of 35 national economies on behalf of acatech and BDI. 

“Internationally, Germany is still an important and respected location for innovation and has even moved up a place compared to the innovation indicator 2015“, says Professor Marion A. Weissenberger-Eibl, director of the Fraunhofer ISI. “However, this good result should not obscure the fact that Switzerland, Singapore and Belgium are far more innovative. For Germany to remain competitive, it must catch up, above all in the field of digitalization – the Innovation Indicator shows Germany performs very poorly in this promising future field.”

Germany only makes a disappointing 17th place in the digitalization indicator, which was surveyed for the first time this year. No digital field shows especially good results, whether the digital industry (ranked 12th), education (ranked 17th) or digital research/technologies (ranked 16th). This also applies to digital infrastructure, where Germany only places 19th internationally. If the country wants to catch up in digitalization, this will require greater involvement of small and medium-sized enterprises (SMEs), further expansion of training and education in digitalization and enhanced IT security. However, a positive result is the intensive use of digital technologies in German society. Unlike the digitalization indicator, the innovation indicator looks at the innovation system of the analyzed countries as a whole. Germany performs better in the analyzed sub-areas of science (ranked 11th), education (ranked 8th) and society (ranked 13th), but again, the country does not reach any of the top places internationally. The results are hardly better for government (ranked 8th) and industry (ranked 7th).

“Germany has to improve rapidly in innovation competition”, says BDI’s president Dieter Kempf. “Policy must stimulate investment in innovation and quickly introduce the tax-based R&D funding that is already available almost everywhere else in Europe.” Every euro of tax-reduction generates about 1.25 euros of private investment. “A must for digitalization and industry 4.0 is to push broadband deployment and make the European digital single market a reality“, urges Kempf. “There is huge potential in the digitalization of public administration”.

Well trained skilled workers, innovative companies and comparatively large numbers of patent applications per inhabitant are some of Germany’s strengths. The education system’s advantages include good vocational training and a large share of academics with high-level qualifications. There are declining shares of employees in knowledge-intensive services and of venture capital investments in gross domestic product.

Alongside the digital single market and national competence monitoring, the recommendation of acatech and BDI for policy makers is to introduce the innovation principle for new legislation. A new national STEM strategy (for the science, technology, engineering, mathematics) is also needed with a focus on quality assurance, talent promotion and training in digital transformation.

About the Innovation Indicator

The Innovation Indicator is a regular, comparative study of innovation strength and was published for the first time in 2000. It captures the conditions for innovation in Germany as an industrial location and compares them in a ranking in the areas of industry, science, education, governance and society as well as in an overall indicator with the globally leading industrial countries and newly emerging economies. This creates the basis for innovation policy decisions. The Innovation Indicator is a cooperation of acatech – the German National Academy of Science and Engineering and the Federation of German Industries (BDI). The study is conducted by the Fraunhofer Institute for Systems and Innovation Research ISI in cooperation with the Center for European Economic Research (ZEW). The innovation indicator was initiated by the BDI together with the Deutsche Telekom Stiftung before acatech became a cooperation partner in 2015.

The publication can be downloaded here:

The Fraunhofer Institute for Systems and Innovation Research ISI analyzes the origins and impacts of innovations. We research the short- and long-term developments of innovation processes and the impacts of new technologies and services on society. On this basis, we are able to provide our clients from industry, politics and science with recommendations for action and perspectives for key decisions. Our expertise is founded on our scientific competence as well as an interdisciplinary and systemic research approach.

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