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Germany is a leading player in global innovation and science. The Federal Government’s High-Tech Strategy (HTS) sets the mid-term strategic orientations for Germany’s R&D and innovation activity: reinforce the S&T base, enhance innovation and job creation, and help address global challenges to improve people’s lives. The HTS will be expanded into a comprehensive interdepartmental innovation strategy and will cover both technological and societal innovations and seek to transform research results into practice better and faster.

Hot Issues

Hot Issues are major national STI policy priorities, as self-reported by countries in their responses to the OECD STIO 2014 policy questionnaire.

Innovation to contribute to addressing social challenges (including inclusiveness)

Unlike the R&D policy of the past, the HTS will promote not only individual emerging technologies but will also respond to society’s need for sustainable solutions for clean energy, good and efficient health care, sustainable mobility, secure communications, and Germany’s future competitiveness as an industrial location. The HTS also aims to create lead markets and identified wide-ranging forward-looking projects (Zukunftsprojekte) that are expected to affect society. Implementation of the HTS is supported by a host of initiatives, with priority to funding private and public R&D, reforming the education system, and improving industry-science linkages. With a budget of USD 960 million (EUR 770 million) for 2011-15, the German Centres of Health Research, research consortia involving 120 institutions, promote co-operation by the best researchers to speed up the bench-to-bedside transfer of health research.

Targeting priority areas/sectors

The goal of the above-mentioned forward-looking projects, such as Industry 4.0, Sustainable Mobility and Better Health, is to reach specific S&T objectives over the next 10 to 15 years. The Framework Programme Research for Sustainable Development (FONA) (2010-14) supports research on climate change mitigation and adaptation, sustainable resource management, and innovative environmental and energy technologies, with a budget of USD 2.5 billion (EUR 2 billion). It seeks to maintain and enhance Germany’s position as a leader in these technology areas. The National Research Strategy Bioeconomy 2030, with a budget of USD 2.6 billion (EUR 2 billion) for 2011-16, aims to strengthen the future competitiveness of the German biotechnology industry and thus to help address global challenges in nutrition, climate change, etc. Other sectoral programmes include the Nano Initiative – Action Plan 2015, the Photonics Research Germany programme with USD 526 million (EUR 410 million) over 2012-15, and the German Space Activities with an annual budget of USD 1.5 billion (EUR 1.2 billion). The Leading Edge Cluster Competition (three rounds since 2007) supports high-performing clusters in their respective areas. The CLIENT project, a funding line under FONA, helps to establish international partnerships on R&D and application of environmental and climate protection technologies and to trigger the development of lead markets. The programme as of 2015 is currently under development. Some initiatives have been directed towards services, such as Innovation with Services (until 2013) and the Services Task Force within the Science and Industry Research Union.

Improving the framework conditions for innovation (including competitiveness)

The HTS also aims to improve competitiveness, in particular of innovative SMEs. Germany has favoured direct public support for business R&D and innovation over R&D tax incentives. Technology funding for SMEs by the federal government increased from USD 943 million (EUR 783 million) in 2007 to USD 1.8 billion (EUR 1.4 billion) in 2013. The Central Innovation Programme for SMEs (ZIM), with USD 705 million (EUR 550 million) a year, offers grants for SMEs’ applied R&D and innovation projects. The Innovation Vouchers (2011-16) fund 50% of the cost of professional advice on innovation management for SMEs.<br /> As the venture capital market is at the OECD median (Panel 1h), VC holding companies investing in young technology companies obtain tax relief, and the Investment Grant for Business Angels, started in 2013, reimburses 20% of VC investments that remain for more than three years in the start-up. It complements existing instruments such as the High-Tech Gründerfonds for start-up firms (since 2005).

Country Charts

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Selected Highlights

STI policy governance

The HTS has served to link various innovation policy fields across federal ministries. In line with the challenges-led approach, BMBF’s second foresight cycle (2012-14) takes a demand-oriented perspective. To keep abreast of recent developments, it will also update the results of the first cycle (2007-09) on cutting-edge technology fields, and link the two perspectives, which will help to shape future research and innovation policy. The German Energy Transition (Energiewende) has led to the creation of various new platforms and networks to co-ordinate actors across the innovation system (e.g. the Energiewende Research Forum).

Universities and public research

Germany has a strong science base, and high public spending on R&D (Panel 1a). Its performance in terms of top 500 universities is below the OECD median. Germany ranks fourth globally in terms of publication output and number of citations. Give the size of its GDP, publications in top journals are somewhat below the OECD median (Panel 1c). German researchers are well connected internationally; 46% of scientific articles are published with international co-authorship (Panel 1q). Major initiatives are under way to further strengthen the performance of universities and PRIs. The Pact for Research and Innovation (updated in 2009) is a joint effort of the federal government and the states (Länder) to increase R&D funding of major PRIs, including the German Research Foundation (DFG), by 5% a year over 2011-15. In all this will mean USD 6.3 billion (EUR 4.9 billion) in additional funding for R&D. As part of the Higher Education Pact 2020, DFG provides overhead funding (of 20%) for university research projects to improve their flexibility and latitude to carry out excellent research. The Academic Freedom Act, effective from the end of 2012, grants more autonomy to non-university PRIs in matters of funding and staffing. The goal of the Initiative for Excellence (2007-17) is to enhance the international visibility and competitiveness of universities as centres of research. It undertakes competitions in three areas: graduate schools, excellence clusters and institutional strategies. These have recently been complemented by funding schemes such as the Research Campus competition launched by BMBF in 2011 (see below).

Technology transfers and commercialisation

German industry and science have strong links and a very high proportion of public research is funded by industry (Panel 1o). On-going initiatives to strengthen and improve collaboration between business and science include the Leading Edge Cluster competition (since 2007), with a total funding of USD 1.4 billion (EUR 1.2 billion) (50% private funds and 50% from BMBF), and Research Campus, a competitive funding scheme under the HTS. A research campus is required to bring together private and public research competences at a single location, have a medium to long-term perspective, and build a reliable public- private partnership. The Science and Industry Research Union is tasked among other things with advising on faster and more effective transformation of innovative ideas into innovative products.

Skills for innovation

The German innovation policy considers a lack of skilled personnel being an emerging constraint. Various measures promote MINT disciplines (mathematics, informatics, natural sciences and technology). The Graduate Schools competition of the Initiative for Excellence (managed by DFG) seeks to create optimal conditions for training doctoral students with a structured study programme in a stimulating research environment to prepare them for a career in research or industry. In total the annual budget is some USD 70 million (EUR 60 million).The Quality ofTeaching Pact has a budget of USD 2.5 billion (EUR 2.0 billion) to improve the quality of teaching from 2011 to 2020. Following the adoption of the Pact for Research and Innovation, the number of employees in scientific research organisations rose by 26.5%, and the number of their doctoral students doubled between 2005 and 2012.

Recent developments in STI expenditures

Germany spent 2.98% of GDP on R&D in 2012, up from 2.53% in 2007. Public and business expenditures on R&D, at 0.96% and 2.02% of GDP, respectively, in 2012 are both well above the OECD average (Panel 1a, d), owing to the government’s focus on R&D and to Germany’s specialisation in R&D-intensive industries. GBAORD increased by about a third between 2007 and 2013, despite the recession and fiscal consolidation. GERD is targeted to reach 3% of GDP by 2020, and public investment in R&D and innovation continues to be a top political priority.