Belgium outranks Germany on innovation, study finds

Deutsche Bank store. Berlin, 2010. [Luis Villa del Campo/Flickr]

The innovative strength of the German economy has slipped in 2014, according to a recent study by the Centre for European Economic Research (ZEW), meanwhile confirming that Switzerland remains the most innovative economy in the world. EURACTIV Germany reports.

Germany placed 6th according to the ZEW “innovation indicator 2014”, which compares 35 industrialised countries.

The study released on Wednesday (29 October) was conducted by the Centre for European Economic Research (ZEW) and two other institutes on behalf of the Telekom-Stiftung and the Federation of German Industries (BDI).

With an indicator value of 56 points, Germany is far behind global leaders Switzerland (76 points) and Singapore (65 points).

But the gap between Germany and the countries placed just above it in the ranking is relatively small – Sweden received 56 points, Belgium 58 and Finland 60.

Germany idle since 2010

Compared to the previous year, Germany’s overall indicator value has hardly changed and its ranking is the same.

But in a long-term comparison, it becomes clear Germany was not able to continue the upward trajectory it began in 2005. Post-2010, there was no improvement in Germany’s innovative performance compared to its most important competitors.

In the economic rating, Germany lost one point compared to last year, and fell from third to fifth place in the international comparison. Along with Switzerland, other countries that outperformed Germany in this category include South Korea, Taiwan and Norway.

Likely reasons cited for the slight deterioration in the German economy’s innovative performance were its comparatively low venture capital investments, less dynamic development of international patent applications, only moderate growth in employment for knowledge-intensive services as well as slow growth in company R&D expenditures.

“High innovative performance from companies does not happen on its own. We need strong state support of private investments in research and development,” said Dieter Schweer, a member of the BDI’s executive board.

“That includes tax concessions for research and development and improving taxation conditions for venture capital,” he pointed out.

Progress in education and science

In the education sector, Germany’s indicator value has improved for the second year in a row. This can primarily be attributed to better PISA results, further internationalisation of university degrees and more doctorate degrees awarded in science and engineering fields, the study said.

At the same time, in 11th place and with only 48 points, Germany’s education system remains the country’s weakness in the overall innovation indicator.

“It is good that we are making considerable improvements in this area. But even growth from 15th to 11th place cannot be enough to meet Germany’s demands,” said Klaus Kinkel, chairman of the Telekom-Stiftung.

“The differing approaches to education policy among individual regions is just as big of a stumbling block to improving the education system as the ban on cooperation, which should be removed sooner rather than later,” Kinkel commented.

Science was able to increase its innovative performance according to the 2014 innovation indicator, placing Germany 9th in the global comparison. Here, the state promotion of German innovative performance has also increased, driving a consistently positive trend in the sector since 2002. With regard to societal conditions for innovation, Germany placed 11th, scoring near the average among other innovation-oriented economies.

Europe’s position improving overall

The innovation study has been published annually by the Deutsche Telekom Stiftung and the BDI since 2005. It is meant to shed light on innovative ability in the economy, science, education, the state and society.

The focus of this year’s edition was comparing the three biggest economic areas North America, Asia and Europe. Since 2000, Europe has been able to slowly but steadily improve its innovative performance, even surpassing North America in 2010. 12 of the 20 strongest innovator countries are located in Europe.

With regard to science, Europe has been ahead of North America since 2005. But thanks to international beacons like Harvard, Stanford and MIT, the United States is still the undisputed leader in research excellence.

Meanwhile Asian countries are quickly catching up with European and North American economies on innovation.

Last November, the European Parliament formally approved Horizon 2020, the funding programme for research and innovation for the 2014-2020 period, almost putting the final seal on a budget tranche that would rise by 30% from the current period to a total of €80 billion.

Horizon 2020 is a part of Innovation Union, a Europe 2020 flagship initiative aimed at enhancing global competitiveness. The European Union leads the world in some technologies, but faces increasing competition from traditional powers and emerging economies alike.

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