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The Federal Government research and innovation policy aims to find solutions to global challenges, boost Germany's competitive edge and safeguard future-proof employment.

The Federal Government’s objectives and priorities in the area of research and innovation policy

The Federal Government research and innovation policy aims to find solutions to global challenges, boost Germany's competitive edge and safeguard future-proof employment.

The Federal Government’s research and innovation policy serves society, the economy and the individual citizens in our country. It aims to find solutions to global challenges, boost Germany’s competitive edge and safeguard future-proof employment. In doing so, the policy is oriented towards a sustainable economic framework and reduced resource use.

Investments in research and development (R&D) in Germany have never been higher than in the last few years. Over the period 2005 to 2016, Federal Government expenditure on research and development increased from 9 billion euros to the target figure of 15.8 billion euros in 2016, a growth of over 75%. According to provisional estimates, in 2014, the state and industry together invested almost 84 billion euros in R&D, in other words, approximately 2.9% of the gross domestic product (GDP). Thus, the goal of the Europe 2020 strategy – for 3% of GDP to be invested annually in R&D – has almost been achieved. It was these investments that made Germany’s recent increase in innovative capacity possible in the first place. Further advancements in the digitalisation process will strengthen Germany’s position as an innovation hub. At the same time, the transition must be managed to ensure that employment and social participation are maintained, competition is not restricted and consumers’ interests are protected. Among small and medium-sized businesses in particular, the potential for creating new jobs in industry, as well as in industry-related and more knowledge-based services, can – and indeed must – be maximised. The Federal Government is playing a major role in this endeavour (cf. the info box Germany’s innovation model in the age of digitalisation). Innovations are the drivers of our economy; they accelerate product and service cycles and have a direct impact on value chains and competitiveness. They are developed in a complex process that evolves from basic to applied research. The priority for the future will be to activate previously unexploited innovative potential, especially in the small and medium-sized enterprises (SMEs) sector and by encouraging more start-ups, and to increase society’s involvement in the process. In accordance with a broad understanding of innovation, in its High-Tech Strategy, the Federal Government supports both technological and societal innovations that aim to play an active role in transformation processes. Innovative strength depends on a number of factors: on excellent, creative research, a society that is receptive to innovation, entrepreneurs who are willing to invest, a well-trained, committed workforce, pro-innovation policies and a dynamic, attractive science and education system that offers equal opportunities. The Federal Government is pursuing this integrated approach in its research and innovation policy.

The measures described are in the responsibility of the respective ministries. They are financed, subject to available budgetary resources, within the framework of the budgetary and financial planning approaches (including posts/permanent posts).

Gross domestic expenditure on research and development (2005 -2014)

Fig. I-1: Gross domestic expenditure on research and development (2005 -2014);
Fig. I-2: Federal Government expenditure on research and development in millions of euros (2005–2016)


Germany’s innovation model in the age of digitalisation

Competitive advantages in the key skills required for digitalisation will be decisive in ensuring that we continue to enhance our innovative capability in the international arena and safeguard employment and value creation in this country. In its ninth report, the Commission of Experts for Research and Innovation (EFI) calls for an overall strategy that addresses the structural scope of digitalisation and fosters the digital transformation of the economy. In future, the Federal Government is focusing on four fields of action to increase the dynamism of the German economy.

With regard to its capacity for innovation, Germany is among the worldwide leaders. In R&D terms, five of Europe’s ten top performers are German companies. At 9.2%, no other EU country’s share of medium and high-tech exports in the balance of trade is as high as in Germany. The traditional strength of the German economy has always been and remains the manufacturing sector. With just over one sixth of its workforce directly employed in manufacturing, Germany is a world leader. In particular, the numerous hidden champions among the small and medium-sized enterprises are some of the best in the world.

The present strength of Germany’s innovation model can only be maintained in the long term if we succeed in keeping pace with the technological advances resulting from digitalisation and with the opportunities for new business models. Due to its transformational power in society, industry and politics, digitalisation will not merely have an evolutionary impact but also be highly disruptive. Markets on which German companies are successfully positioned today may undergo fundamental changes. Although this poses significant risks for our future competitiveness, it also opens up new opportunities. For example, according to the World Intellectual Property Organization, for the three emerging technologies, Germany comes in third place for 3-D printing and ranks fifth in nanotechnology and robotics among the global drivers of innovation.

For this reason, the Federal Government places emphasis on four fields of action:

  1. The traditional strengths of Germany’s economy – particularly in industrial value creation with its consider-able share of high technologies – are to be further expanded in order to establish a basis for new intelligent, knowledge-based production environments. To this end, the Federal Government is funding concepts like Industry 4.0 and investing in the development of autonomous systems, smart services and the digitalisation of the medical sector.
  2. Digitalisation gives rise to new value creation potential and frees up room to manoeuvre, especially in the field of data-based services. In order to allow more innovative business models to emerge from the developments of the so-called platform economies, Big Data applications and the Internet of Things, the framework conditions need to be more conducive to innovations and start-ups, as well as more consumer-friendly. This calls for a modern regulatory framework to safeguard self-determination, freedom, transparency, data protection and security. Secure information infrastructures and full compliance with both consumer and data protection form the basis of this framework.
  3. Specially trained, skilled personnel, who are creative and open-minded to boot, are crucial in shaping the digital transformation in industry, both in academia and in vocational training. In future, more young people should acquire extensive IT skills and bring their knowledge into play in the companies.
  4. Finally, it is essential that we broaden the basis for local innovation activities. The innovative strength of small and medium-sized enterprises must be maximised and start-ups encouraged to ensure that the SME sector remains powerful in the digital era.

The Federal Government will continue to accelerate the modernisation of Germany’s economy in these fields of action. The overarching goal is to shape the research and innovation policy framework to enable creativity to develop its full potential with regard to the digital revolution and come up with new, intelligent and knowledge-based solutions.