The German Innovation System: Structure and Some Characteristics

1
The German Innovation System Structure and Some
Characteristics

• Inna Haller
• Rusnanotech 09Moskau, 6. Oktober 2009

2
Structure of presentation

• Introduction
• German Innovation System and its members
• Development of German Innovation System state
  and trends
• New concepts in German Innovation Policy
• Conclusions

3
Introduction

• Innovation as new products, new processes, new
  services, or new organization methods which are
  applied or used and thereby diffuse in markets
  (OECD, EUROSTAT 2005)
• Crucial words new and diffuse
• new to a market or new to a firm
• diffuse funding a suitable market
• Knowledge about innovation is distributed between
  many individuals and firms that compete on the
  market for technology
• Innovation is firmly established throughout wide
  parts of industry, facilitating the rapid and
  thorough diffusion of new technical knowledge
  from inventions (strong participation of SMEs)
• Innovation system is a complex dynamic
  construction whose characteristics emerge through
  the interaction of its members

4
The German Innovation System at a Glance
Quelle Frietsch Kroll (2008)
5
Reporting System on the German Innovation System

• Studies on the German Innovation System
• Niedersächsisches Institut für Wirtschaftsforschun
  g (NIW), Hannover
• Fraunhofer Institute for Systems and Innovation
  Research, Karlsruhe
• German Institute for Economic Research (DIW),
  Berlin
• Centre for European Economic Research (ZEW),
  Mannheim
• Federal Institute for Vocational Education and
  Training (BIBB), Bonn
• Business Communitys Innovation Agency for the
  German Science System, Essen
• Higher Education Information System (HIS),
  Hannover
• Rheinisch-Westfälisches Institut für
  Wirtschaftsforschung (RWI), Essen
• Social Science Research Centre Berlin (WZB)

Report on research, innovation and technological
productivity in Germany provided by the
Commission of Experts for Research and Innovation
Scientific advice to the German Federal
Government
6
Gross Expenditures on RD in selected countries
Gross Expenditures on RD in selected countries
Comparison between business sector and government
Comparison between business sector and government
Share in GER () 70 30 (Business
Government), in Russia 68 32
Sources OECD, Eurostat, Stifterverband,
NSC-Taiwan/China, 2007
partly preliminary data or estimates
7
Some characteristics of industrial RD
Share of internal RD expenditures according to
firm size classes (in )
Share of SMEs (up to 500 employees) in internal
industrial RD expenditures (in )
Share of SMEs in employment 60 (total), 50
(manufacturing industry) Share of SMEs in
turnover 34,6 (total), 38 (manufacturing
industry)
8
New concepts in German innovation policy

• The allocation of public support is based on
  contests of initiatives for self-organized
  cooperation in RD (see Eickelpasch Frietsch,
  2005). Some examples are
• BioRegio (1995-2002)
• InnoRegio (1999-2006)
• EXIST (1997-2005)
• The programs have two special characteristics
• Stimulation of cooperation or networks
• The supported initiatives are selected by means
  of a contest
• The main advantages
• Applicants have a high degree of freedom
• Well suited for stimulating the division of
  innovative labour
• Relatively mobilization effects

9
RD- Expenditures of Higher Education Institutions
Share of third party funds,
Quelle Bundesbericht Forschung und Innovation
2008 Berechnungen und Darstellung des Fraunhofer
ISI
10
Publications and Patents intensities by Research
Associations, 1993-1995 vs. 2004-2006
Quelle STN SCISEARCH EPO PATSTAT Berechnungen
und Darstellung des Fraunhofer ISI
11
Conclusions

• Currently, the German innovation system is still
  competitive in an international comparison.
  However, competition is becoming considerably
  more intense as other industrialized countries
  and some key emerging economies redouble their
  efforts
• Public expenditures in RD increasing, but not
  holding up with private investments. The
  situation is becoming more acute in view of the
  current crisis. In view of falling profits, the
  potential for reinvestment in innovations is
  declining.
• Universities and publicly-supported research
  institutions are becoming increasingly important
  for the dynamics of innovation. An effective
  organization of knowledge and technology transfer
  between science and business are very important.

12

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• Thank you for your attention
• www.isi.fraunhofer.de/p/
• inna.haller_at_isi.fraunhofer.de

13
Germany's Innovation System Strengths

• Germany is the largest exporting country in the
  world, responsible for about 12 of worldwide
  high-tech trade and reaching an export quota (in
  relation to GDP) of more than 47 in 2008.
• Germany has a long-lasting specialization in
  automobiles and machinery, but also in chemicals
  and in traditional electronics
• In many areas, German companies, and in
  particular SMEs, enjoy a competitive advantage
  internationally
• Germany has a good developed system for
  protecting of intellectual property

14
Institutional Basis of the German Innovation
System
Quelle Fraunhofer ISI
15
Structural changes in industrial RD spending in
Germany
Bill. Euro

• The share of external RD expenditures has
  increased (outsourcing)
• Other firms and universities profited most
• Most of industrial funded RD is short-term and
  market-oriented development
• Only recently, the tendency towards more
  long-term oriented research increased

Total RD expenditures
intramural RD expenditures
Source Stifterverband Wissenschaftsstatistik
16
System of Innovation Indicators

• It is not possible to measure and quantify
  innovation and innovation capabilities directly
• Innovation indicators have to be used in order to
  measure latent variables
• Innovation indicators can be divided into three
  groups (Grupp 1997)
• Input- or Resources indicators
• Throughput- or RD-performance indicators
• Output- or Progress indicators

17
Germany's Innovation System Weaknesses

• Financing of innovation activities still
  difficult, especially for SMEs (so far no
  tax-based RD promotion)
• In high-tech sectors (e.g., pharmaceuticals,
  computers, electronics, aircrafts) Germany is
  loosing momentum
• East Germany and Berlin 25 of federal research
  budget (2 bn Euro), 11 of RD personnel, 6 of
  patents
• Output performance of the education system (in
  terms of the share of highly qualified and the
  performance of pupils) still needs improvements
• Public expenditures in RD increasing (high-tech
  strategy), but not holding up with private
  investments