Innovation ranking: Germany lags behind in digitalization

Germany ranks a respectable fourth in a recent international innovation ranking. However, Germany's performance in digitalization is worrying.

The Fraunhofer Institute for Systems and Innovation Research (ISI) and the Centre for European Economic Research (ZEW) investigated for the study the innovation potential of 35 industrialized nations. The authors also calculated an indicator for the progress of digitalization in the individual economies. Germany ranks a long way behind France in 17th place. The top rankings are secured by Finland, Sweden, and Israel.

The results in the overall ranking of the innovation indicator look better: Here, Germany just misses a place on the podium, coming in fourth behind Switzerland, Singapore and Belgium.

Light and shadow

According to the study, the strengths of the German innovation system include good vocational training with a high proportion of highly qualified academics in the so-called STEM subjects, a high contribution of high-tech industries to value creation, extensive state funding of the science system and a high number of patent applications per capita compared to other major industrialized nations.

The weaknesses in this country lie in a declining trade balance for high-tech goods and the share of employment in knowledge-intensive services, as well as venture capital investments as a percentage of gross domestic product. Unlike in most other industrialized nations, the German government has so far refrained from tax incentives for research and development. ZEW Project Manager Dr. Christian Rammer says:

"Germany's strong position in the innovation indicator is due to its balanced innovation system. Instead of top performance in individual areas, Germany scores highly for its willingness to innovate across the economy and society."

Maintaining these, according to Rammer, should be the top priority of innovation policy.

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