When the Market Dips, Germany Invests in Research

At the same time that others have cut back, Germany has responded to the global economic downturn by decisively stepping up investment in research and development across both the public and private sectors. Since 2005, federal expenditures on research have increased by 21 percent, while the private sector has seen a similar increase of 19 percent.

As recent statistics show, this increased investment is already paying off: according to an August 2011 bulletin from the German Institute for Economic Research (DIW), German companies have expanded their share in world markets of R&D-intensive goods during the economic crisis, playing a major part in Germany’s 3.6 percent growth in 2010. This compares to a 2.9 percent growth rate in the USA and an even more sluggish 1.87 percent growth rate across the whole EU during that same period.

Public Support for Research Excellence
German universities and public research institutes are critical contributors to – and beneficiaries of – the German federal government’s progressive culture and climate of innovation. One major program that supports this climate is the “Excellence Initiative” of the German federal and state governments, which provides significant funding aimed at propelling research groups, graduate schools, and entire universities to elite, world-class status. In its first two rounds of appropriations, the program has already supported the recruitment of 4,200 researchers and scientists, 25 percent of whom came from overseas. And the most recent round of funding, which closed its call for proposals in September 2011, will introduce an additional €2.72 billion into universities and programs starting next year.

Non-university research institutes are also benefitting from this increase in R&D spending; thanks to the Joint Initiative for Research and Innovation, these institutes are receiving five percent additional funding per year until 2015 for international research projects.

Public-Private Linkages
While Germany’s public sector accounts for less than a third of overall annual investment in research and development, it continues to have a very significant impact on the overall economy, including the private sector: independent research from the Association of German Chambers of Industry and Commerce (DIHK) found that some 31 percent of companies can trace their innovative behavior to central government research and innovation policy. And more than 100 industry research associations, representing over 50,000 small and medium enterprises, undertake research projects or search out research partners and university resources for their members.

Additionally, the German federal government has established science and innovation centers in several major cities worldwide in order to provide local companies with a single point of contact for research collaborations with Germany. These German Houses of Science and Innovation in New York, Moscow, New Delhi, Sao Paulo, and Tokyo aim to showcase German science and scholarship, university research, and research-based companies.

Skilled Graduates and Technology Transfer
Highly-skilled, specialized employees are the core of the German labor market and will remain so in the future. Among OECD countries, Germany has the second-highest rate of graduates with a doctoral degree, with 315 PhD graduates per million inhabitants. And, at 31 percent, Germany’s proportion of current university students in the sciences, mathematics, computer sciences, and engineering is the second highest in the entire EU.

Finally, there is plentiful evidence of the success of Germany’s knowledge and technology transfer systems. More than 27 percent of German manufacturing companies’ income originates from the sale of recently developed innovative products. Innovative products constitute a much lower share of the turnover of manufacturing companies in France and the UK at just 16 percent, while the European average stands at 19 percent. Germany has a very strong track-record in successfully patenting innovations as well; currently more than 12,500 German patents are registered by the European Patents Office, about twice as many as from France and the UK combined.

Today, around 20 percent of Europe’s scientists and scholars live and work in Germany – many of whom have been attracted by a climate of innovation that values research and development. As German industry and government continue to step up investment in research and development, students and staff at German universities stand to reap great benefits.

To learn more about the Excellence Initiative, visit

For more information about the German Houses of Science and Innovation around the world, go to

For more information about the German research landscape, career and funding opportunities, please visit