Innovation Indicator 2018: Germany’s innovation performance is stagnating

21.12.2018

The Innovation Indicator 2018, compiled for the Federation of German Industries (BDI) by Fraunhofer ISI together with the Centre for European Economic Research (ZEW), ranks Germany in fourth place as in 2017. However, the international innovation ranking indicates that the gap has lengthened to the leading countries of Singapore, Switzerland and Belgium. The openness indicator, which was determined for the first time, certifies that the German innovation system has the highest degree of openness among the world’s largest economies.

Germany was not able to improve its position in the international comparison of innovation in 35 national economies and even loses ground to the leading group comprising Singapore, Switzerland and Belgium. This is the result of the Innovation Indicator 2018, conducted by the Fraunhofer Institute for Systems and Innovation Research ISI together with the Centre for European Economic Research (ZEW) on behalf of the Federation of German Industries (BDI).

“Even though Germany once again ends up in one of the top places in the Innovation Indicator 2018, this does not imply that everything is running smoothly in Germany in terms of innovation. In particular, innovation processes at universities, research organizations and companies must become more open and better coordinated”, says project manager Dr. Rainer Frietsch. “Germany must aspire to be one of the world’s leaders in terms of innovative capacity”.

At present, Germany does not achieve a top position internationally in any of the sub-areas considered by the Innovation Indicator – neither science nor education (10th place in each) or society (12th place). The results are slightly better only in the fields of governance (8th place) and industry (9th place), but Germany’s industry has slipped down two places compared to the previous year.

“Continuously poorer performance in innovation competition is a cause for concern. This trend must be halted”, says BDI President Dieter Kempf. “Policymakers have no time to lose and must set the right course now for future innovations. Sufficient tax incentives for research and development together with effective project funding would provide the necessary momentum”.

In addition to the introduction of tax incentives for research and development, which supplement the existing range of project funding instruments, there should also be a significant increase to the financial resources of 2.7 billion euros earmarked so far for the promotion of excellent research (Excellence Initiative). In addition, innovation support should focus more on the development and diffusion of new business models and the establishment of entirely new market segments or markets.

For the first time, an openness indicator was determined as part of the Innovation Indicator. Germany performs best here among the largest economies worldwide and is ranked 21st overall, ahead of the US, Japan or China. German industry is relatively good here in comparison and is ranked 17th on the openness indicator. Openness is so important for the innovation system precisely because interactions and exchanges can lead to new cooperations and ideas that are essential for innovations. Furthermore, analyses show a clear correlation between the success and the openness of innovation systems.

A key recommendation by the team of researchers is to continue to foster well-functioning knowledge transfer between science and industry. Prof. Marion A. Weissenberger-Eibl, institute director at Fraunhofer ISI, explains how this could function: “Knowledge exchange can be done by a transfer of minds, for example, persons from research and from industry temporarily switching to the other field. Opening innovation systems can also be promoted by experimental spaces or real-world labs, where new methods are tested and prepared for use on the market”. In addition, open access to research results and open data as well as a stronger participation of normal citizens in research processes (citizen science) are important elements of an open innovation culture in Germany that can contribute to the required cultural shift towards more openness.

About the Innovation Indicator

The Innovation Indicator is a regular, comparative study of innovative strength and was published for the first time in 2000. It records the conditions for innovation in Germany and compares them with globally leading industrial countries and emerging economies worldwide in a ranking in the areas of industry, science, education, governance and society as well as using an overall indicator. This creates a foundation for innovation policy decisions. The Innovation Indicator is compiled on behalf of the Federation of German Industries (BDI). The study is conducted by the Fraunhofer Institute for Systems and Innovation Research ISI together with the Centre for European Economic Research (ZEW). The Innovation Indicator was initiated by the BDI in cooperation with the Deutsche Telekom Stiftung.

The publication (in German) can be downloaded here: www.innovationsindikator.de.

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.