Innovation Europe > News > Innovation EU Vol1-1 > Germany

The total surplus in trade of goods and services (including net factor income and net transfer payments) increased to almost E160bn, which is the top world position. R&D and knowledge-intensive goods are the main contributors to this particular strength in international trade. The high current accounts surplus reveals the high level of competitiveness of German industry. High R&D expenditures, strong innovation orientation of firms, highly efficient production processes and relatively cheap labour costs (compared to productivity levels) are the most important competitiveness factors.

The EIS supports this assessment. In 2007, Germany ranked seventh globally, and fourth within the EU economies.

Despite the comparably good innovation performance of the German economy, policy is concerned with maintaining good performance and further improving it in areas were Germany is lagging behind its main global competitors, the US and Japan. Causes of concern are the low quality of the education system, the lack of highly qualified labour, a (perceived) falling behind in some high-tech areas, difficulties for startups and small to medium-sized enterprises in finding sufficient funding for innovation (especially venture capital (VC)), a decreasing propensity to perform R&D among small firms (for example, because of a lack of a generic R&D funding scheme such as tax incentives), and a means of technology transfer between science and business that is perhaps not as effective as it could be.

Main innovation challenges

• Skills for innovation and supply of highly qualified labour.
• Economic restructuring towards high-tech sectors·.
• Innovation financing for high-tech start-ups and SMEs.

Action

Current trends in German innovation policy are closely related to the above-mentioned challenges. Programmes related to financing have gained in importance, as well as activities related to the high-tech strategy and the Federal government’s attempts to strengthen Germany’s performance in high-tech sectors. The most recent policy developments include:

• The Top Cluster Programme, which attempts to fund regional thematic clusters that bring together public research and enterprises to further develop high technologies in various areas. Clusters are identified through a bottom-up approach. There will be three rounds of competitions. In each round up to five clusters will be selected for funding, providing €200m of public money for each round.
• The ZIM programme (central innovation programme SME) which has merged a number of previous programmes (ProInno, InnoNet, NEMO, InnoWatt) is intended to ease access for SMEs and increase flexibility in programme administration as well as shifts in programme resources among various programme elements. ZIM has received significant additional funds of about €450m for both 2009 and 2010. Consequently, the target group has been enlarged to cover enterprises up to 1,000 employees.
• The new BMBF programme, SME Innovative, attempts to ease access of SMEs to thematic R&D programmes by simplifying application procedures.