This article points to ‘windows of opportunities’ in Germany, calling on government, academia, industry and financial services to take steps others have not taken in domains where the country is on an equal footing with its competitors.
Germany’s innovation system badly needs a boost. Output is still strong, but prospects are dim due to structural problems. Notorious weaknesses include slow structural change towards cutting-edge technologies, weak supply of risk capital, and declining contributions to innovation from SMEs.
A long list of remedies is under discussion, and the government is slowly starting to tackle some of them in its current “Year of Technology”. However, they all aim at catching up with other nations’ higher standards. Catch-up is essential, but not enough. To gain a true competitive edge, Germany needs to take steps others have not taken, in domains where it is on an equal footing with competitors:
- Attract foreign brains while the US deters them from entering. The new US homeland security policies seriously deter foreign top talent from going to the US. Germany should, and could, attract a significant share of this human capital.
- Incite innovation by appreciating companies’ intellectual property (IP). Most financial service providers do not employ in-depth IP valuations. Taking the lead here would not only encourage R&D activity, but also generate competitive advantages for financiers ahead on the learning curve.
- Set up a balanced IP protection regime to foster the creation and flow of ideas. Stronger IP protection is not always better. Chances are that patents on software, common practice in the US and on the brink of being legalised in Europe, in fact stifle innovation. Europe could still alter course.
- Deregulate the airwaves to foster experimentation in mobile services. The weakly regulated internet produced a wealth of innovations. Airwaves, heavily regulated around the globe, could be the next innovation dorado – Germany’s tentative steps towards liberalisation should be bolstered.
All four of these windows of opportunity promise swift positive effects on the German innovation system. But none of them will stay open for long. Government, but also academia, industry and financial service providers, should act rapidly and boldly.
hereto read the full analysis.