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Article - Innovation Policy

Innovation Policy

Introduction

Innovation and technology are changing the world and peoples’ lives. Many things that used to sound very futuristic have become part of our daily life. And there is a possibility that much of it will soon be overtaken by even newer developments. In order to improve the competitiveness of our companies, create long-term economic growth, prosperity and new jobs, we therefore need to invest in research, innovation and training.

The Federal Ministry for Economic Affairs and Energy aims to foster Germany’s innovation capacity by creating an environment that is conducive to investment and by providing funding programmes that are targeted to the needs of the market. These funding programmes are to help small and medium-sized enterprises embrace new innovations and digitisation, inspire young people to choose a career in technology and natural sciences, and secure an adequate supply of skilled workers for the future.

Our goal must be to make Germany one of the most innovative nations of all, one that is spearheading key enabling forward-looking technologies, both today and in the future. In order to achieve this, the Economic Affairs Ministry has various programmes to promote the innovative activities of small and medium-sized enterprises. A report is regularly compiled about these programmes and their impact. Germany’s innovation policy is based on the principle “From concept to market success”. This latest report can be found here (in German) (PDF, 177 KB).

In order to further enhance the attractiveness of Germany as a place for research and innovation, the Federal Government has passed the Act on Tax Benefits for Research and Development (often referred to as the Forschungszulagengesetz or Research Allowance Act), which came into force on 1 January 2020. It is estimated that companies will draw 5.6 billion euros from the research allowance over the next five years.

The Research Allowance Act is a separate ancillary tax law that supplements the Income Tax Act and Corporation Tax Act and serves to promote private sector research and development. Projects* eligible for funding are projects in the fields of basic research, industrial research and experimental development. All companies conducting research activities and paying tax in Germany can apply for the allowance (as it is not limited to SMEs). However, the assessment base, i.e. the eligible expenses that a company can claim back tax on, is limited to 2 million euros per fiscal year.

Four figures on innovation activities in Germany

72.1
Symbolicon für Münzen

billion euros
is the amount invested by German companies in in-house research and development activities.

172.6
Symbolicon für Geldscheine

billion euros
is total amount of money spent by German companies on new products, services and processes.

3.13
Symbolicon für Tortendiagramm

per cent
is the share of the German GDP that is invested in research and development.

181.4
Symbolicon für Unternehmen in Deutschland

thousand German companies
do regularly bring new innovations onto the market.

Germany – a hub for technology

High-tech made in Germany

Germany has a long tradition of being at the forefront of technological innovation. Around 33,700 companies in Germany are continuously active in research and development; more than 181,400 companies regularly bring new products and services onto the market.

These companies create a positive environment for innovation. According to data provided by the Donors’ Association for the Promotion of Science and Humanities in Germany, German companies invested around €72.1 billion in research and the development of new products and services in 2018. The total amount of investment that goes into new innovations, from their development to their launch onto the market, stands at around €172.6 billion.

There is high demand for technology products made in Germany. Germany has an above-average number of ‘hidden champions’. These are usually small and medium-sized enterprises that are world market leaders for their products and services. Their success is based on a long-term company strategy, a high level of private equity and a highly skilled workforce.

An excellent research infrastructure

German companies can draw on the expertise of numerous internationally renowned research institutes (such as the Max Planck Society, the Fraunhofer Society, the Helmholtz Association of German Research Centres, the Leibniz Association, and the research facilities governed by German ministries) and universities.

German companies have a strong position on the markets and therefore Germany often ranks among the top countries in innovation rankings, generally behind Switzerland and the Scandinavian countries, but always ahead of other major economies. However, Asian countries, particularly China and South Korea, are catching up. German companies therefore need to deal with the fact that the number of global competitors will rise in the technology sector.

Policy measures that help raise Germany’s innovation potential

The Federal Ministry for Economic Affairs and Energy provides a wide range of funding programmes for innovative SMEs. Under the ‘From concept to market success’ initiative, we have restructured, pooled and streamlined these programmes. The measures set out in these programmes target the whole of the innovation chain – from creative idea to the implementation of new products and services. A special focus is placed on transferring technologies from research to the market. In addition to this, the Federal Ministry for Economic Affairs and Energy provides funding for specific research and technology projects undertaken by companies – often in cooperation with research institutions – in technology areas such as energy, information and communications technology, the maritime economy, mobility and aerospace.

In addition, the Federal Ministry for Economic Affairs and Energy is further improving the framework for research and innovation. In particular, such clothing and equipment includes

The measures undertaken by the Federal Ministry for Economic Affairs and Energy for the promotion of research and innovation are part of the Federal Government’s ‘High-tech Strategy - Innovation for Germany’ that covers all of the government’s measures that promote research, technology, and innovation. The Economic Affairs Ministry’s measures aim to strengthen the innovation capacity, particularly of small and medium-sized companies and start-ups.

Transfer initiative: more ideas - more successes

Minister Altmaier launched the Economic Affairs Ministry’s transfer initiative in March 2019. It aims to foster the realisation of ideas in marketable products. To this end, the Economic Affairs Ministry will work with innovation stakeholders to see which measures to transform ideas into products already work well, and to identify areas where improvements can be made. The aim is to optimise the innovation ecosystem in Germany and thus to boost the number of innovators and the rate of innovative activity.

Transfer Initiative

More ideas - more successes

In March 2019, Minister Altmaier launched the Economic Affairs Ministry’s transfer initiative. It aims to foster the realisation of ideas in marketable products. To this end, the Economic Affairs Ministry works with innovation stakeholders to see which measures to transform ideas into products already work well, and to identify areas where improvements can be made. The aim is to optimise the innovation ecosystem in Germany and thus to boost the rate of innovative activity. The key elements of the transfer initiative, which is based on the funding concept ‘From the idea to market success’, include a series of dialogues and a roadshow. In various regions across Germany, dialogue events will take place with a view to exploring obstacles across the spectrum of technology and knowledge transfer and discussing possible improvements. The roadshow will provide information about the Economic Affairs Ministry’s funding portfolio and the outcome of the series of dialogues.

Hand in front of a virtual background, symbolising the transfer initiative

© stock.adobe.com/greenbutterfly

Transfer initiative: more ideas - more successes

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Promoting innovation and providing advice

Promoting research and innovation in SMEs

Innovations help maintain the competitiveness of German SMEs. In order to increase competitiveness and harness the potential for development, the Federal Ministry for Economic Affairs and Energy has put in place dedicated programmes for small and medium-sized enterprises (SMEs) that promote research and development, provide advice on innovation and facilitate cooperation with the academic world.

The Economic Affairs Ministry provides SMEs with grants and low-interest loans so that they can finance their research and innovation activities more easily. New scientific findings are to be translated into marketable products as soon as possible. This is why the Ministry provides strong incentives for companies to cooperate with research institutes.

Research and innovation projects that are close to the market

Under the Central Innovation Programme for SMEs (ZIM), grants are provided for market-oriented technology research and development projects undertaken by German SMEs.

The ERP Digitisation and Innovation Programme provides funding for digitalisation and innovation projects and helps innovative companies to finance investments and new equipment. The aim is to enable innovative commercial companies, own-account workers and freelancers in Germany to access finance for projects in Germany at attractive interest rates. The financing partners passing on the loans (banks and savings banks) are offered an optional 70% liability release for loans. A grant is offered in addition to the loan (ERP Digitisation and Innovation Loan).

The ‘ERP Mezzanine for Innovation’ funding programme provides long-term and low-interest financing for market-related research and the development of new products, processes and services, and for important advancement work on these products, processes and services based in Germany. The programme gives established SMEs access to financing packages consisting of debt capital and subordinated loans (ERP Mezzanine Financing for Innovation).

Pre-competitive research

In order to hold their own in the international race to innovate, SMEs need to have access to research facilities whose R&D efforts are tailored to their needs and whose findings can be quickly and efficiently translated into marketable products and services. The Federal Ministry for Economic Affairs and Energy provides funding for pre-competitive research under its collective research programme (IGF). The results achieved under this programme benefit all companies in Germany. Under the INNO-KOM programme, funding is provided for non-profit research establishments that undertake applied research projects in structurally weak areas in Germany. Find out more (in German).

Advising companies on innovation

The German government provides SMEs with advice on innovation, helping them to build up expertise in developing new innovations. This means for example that companies receive information on how to manage innovations in an effective manner and on what funding programmes are available at national, regional and EU level.

  • The Federal Ministry of Economics and Energy’s Innovation Vouchers (go-inno)
    The Federal Ministry for Economic Affairs and Energy provides innovation vouchers for SMEs in the commerce and skilled crafts sector that use the services of external consulting firms with a view to preparing and conducting innovations in products and technical procedures. For more information, please visit www.innovation-beratung-foerderung.de (in German) – the Ministry for Economic Affairs’ official website dedicated to the ‘go-Inno’ funding programme.
  • National contact point for SMEs
    The national contact point for SMEs (NCP SMEs) provides information and advice about the funding programmes offered by the European Commission, particularly about SME-specific funding schemes, and about how companies can claim venture capital under the EU’s ‘Horizon 2020’ research and innovation programme. If you want to keep updated about the latest news, please sign up for the newsletter (in German) published by the national contact point for SMEs or visit the www.nks-kmu.de (in German) website.

    Advisory services continue in spite of the coronavirus pandemic.
  • Federal advice on funding for research and innovation
    The Federal Government’s information service provides information on all issues surrounding the research and innovation promotion programmes provided by the Federal Government, the German Länder and the European Commission, on important contact persons and on current funding priorities. In addition to this, the information service provides special assistance for SMEs free of charge.

    Advisory services continue in spite of the coronavirus pandemic.

Agency to promote breakthrough innovations

The mission of the Federal Agency for Disruptive Innovation is to ensure that groundbreaking innovations by companies and research institutions become tomorrow’s cutting-edge German products and jobs. The agency will be open to all subjects, disciplines and technologies, will be agile and flexible and, compared with traditional funding programmes, will be pro-risk and will enjoy a much higher degree of autonomy. It will run innovation competitions and fund cutting-edge projects by subsidiaries which put into practice ideas offering potential for breakthroughs. The agency was founded in Leipzig in 2019. It is still in its early phase and has begun to review the first project submissions.

Fostering networks and clusters

Many companies and research institutions work together in regional or industry-specific clusters and networks in order to create the best possible value chains and improve their competitiveness and innovation capabilities.

  • The ‘go-cluster’programme programme supports Germany’s best-performing cluster management organisations on their path towards becoming professional and internationally recognised centres of excellence. Further priorities include national and international networking, and raising the profile of innovation clusters.
  • Clusterplattform Deutschland – a website run by the Federal Ministry for Economic Affairs together with the Federal Ministry of Education and Research – provides a good overview of the cluster-related policy measures undertaken by the Federal Government, the German Länder, and the EU. The website lists all regional and national cluster initiatives in a way that is clear and concise. It also provides a forum where cluster members and researchers can engage in dialogue.

You can find the model agreements for research and development cooperation here.

Transfer initiative

The sharing of technology and knowledge has a major impact on how marketable innovative products, processes and services are. Despite this, the transfer of knowledge does not go smoothly in many cases – as a result, Germany’s SMEs in particular have a need to innovate. In March 2019, Economic Affairs Minister Peter Altmaier therefore launched the Ministry’s transfer initiative, which is to promote the conversion of ideas into marketable products. To this end, the Economic Affairs Ministry works with innovation stakeholders to see which measures to transform ideas into products already work well, and to identify areas where improvements can be made. The aim is to optimise the innovation ecosystem in Germany and thus to boost the number of innovators and the rate of innovative activity. The transfer initiative, which was included in the coalition agreement, aims to build on and improve the non-sector-specific SME funding programme called ‘From the idea to the market’.

Publications

Warehouse, image regarding the subject of SME financing

© Halfpoint/stock.adobe.com

Financing for start-ups, company growth, and innovations

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Key enabling technologies

Developing state-of-the-art technologies for Germany

In order for German businesses to continue to be leaders in the international markets, Germany needs to ensure that it has high-quality research facilities that conduct research into key enabling technologies.

To this end, the Federal Government provides funding for R&D projects across a wide range of technology sectors. Most of these are conducted by companies in cooperation with research institutions. From biotechnology to the aerospace industry: If you want to learn more about a particular key enabling technology, click through the images in the gallery.

Innovations for the future

Getting young people excited about technology and nurturing young talent

The extent to which we will be able to master the big challenges of our time depends on our ability to make scientific breakthroughs and develop new innovations. Policymakers, representatives from the worlds of business, academia and education therefore need to raise awareness for new technologies, highlight how people can benefit from these technologies in their daily lives, and encourage young people to choose a career in technology.

Skilled professionals – with academic or vocational qualifications – are the key to innovation and competitiveness, to growth and employment, and to prosperity and a good quality of life. Right now, however, it is proving difficult to fill many vacancies in Germany’s engineering sector – a sector which is so crucial to the success of our economy – and to recruit people with excellent technical skills. Demographic change could cause this skills gap to further widen in the coming years.

Our goals:

  • Inspiring enthusiasm for jobs related to natural and engineering sciences. This means that technical and scientific courses have to play a greater role in school and university curricula. Given the growing lack of skilled workers, these types of occupation offer outstanding job and career prospects.
  • Whetting the appetite of and exciting the interest of children and young people for technology so that more young people – women in particular – choose a profession in the natural sciences or engineering.
  • Familiarising school students from an early age with the natural sciences and engineering in a way that they will understand. Young people can already experiment with technology in the labs of research facilities associated with the Federal Ministry for Economic Affairs and Energy (for example, in the German Aerospace Centre’s ‘school labs’).
  • Taking steps to foster a stronger entrepreneurial climate at higher education institutions and non-university research establishments so that more students will be attracted to the idea of launching their own innovative businesses.
Worker

© iStock.com/industryview

Skilled professionals for Germany

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Patents and standards

Protecting intellectual property, developing new standards to encourage innovation

In 2018, just under 27,000 patent applications were filed in Germany – more than in any other European nation. The Federal Ministry for Economic Affairs and Energy aims to foster a spirit of innovation in Germany whilst at the same time ensuring that intellectual property is protected. Standardisation can help innovative products and processes to be rolled out more quickly.

Standardisation

Standards define the state of the art in technology in almost all areas of our lives, and they stipulate the requirements that products and services must fulfil. Standards help provide for systems capability, assure quality, create transparency and protect consumers. Standards can also help to reduce the amount of time needed for innovations to become widely available on the market.

The Federal Government’s standardisation policy objectives are set down in its standardisation strategy. Standards need to be developed globally so that technical barriers to trade can be eliminated, innovations can be rolled out more quickly, and technology-related legislation can be refined. Find out more.

Patents

Intellectual property needs to be protected in an effective way – at both national and international level. This is particularly key in a technology-based economy like Germany where it needs to be ensured that companies can bring their innovations to market and stand the test of global competition. If we want our globalised economy to work well, we need to ensure that intellectual property is effectively protected. International efforts that aim to improve the protection and enforcement of intellectual property rights therefore need to be continued and refined. Find out more.

Quality assurance infrastructure

Research, measurements and accreditation

Germany provides a technical and legal framework that is conducive to innovation and constantly works to improve it. Germany is known for its safe products, for its efficient market surveillance and for standardised measurement methods. All of this helps guarantee free trade, and is an important element in building up a competitive technology base in Germany.

The research facilities associated with the Federal Ministry for Economic Affairs and Energy

The PTB is Germany’s national metrology institute is Germany’s national metrology institute. It ensures the standardisation and dissemination of metrological units and ‘correct’ measurements. For example, the ‘official’ time is determined by using a number of atomic clocks that are among the most accurate clocks worldwide.

Metrology is essential for our modern world. It is needed in all scientific experiment, all industrial process and all trade of goods and merchandise. The PTB’s task is to provide a reliable and advanced metrological infrastructure that meets both the highest requirements of science, the high-teh industry and the digital transformation of metrology, and the marginal conditions of legal metrology in everyday life.

The Federal Institute for Materials Research and Testing (BAM) provides for safety and reliability in the area of chemical, environmental and materials engineering. For example, the Institute tests the containers used for the transport of dangerous goods and draws up the safety standards required for these. It is also responsible for developing and providing reference procedures and materials, particularly in the areas of analytical chemistry and testing technology. The BAM communicates safety solutions, establishes what digital components are necessary in safety technology and ensures that these are implemented by means of establishing standards. It is engaged in developing and validating analysis, testing and assessment methods as well as models, data and required standards. It also researches, tests and evaluates substances, materials, parts, components and equipment as well as natural and technical systems for safe handling and operation.

The Federal Institute for Geosciences and Natural Resources (BGR) provides advice to the Federal Government and to the private sector on all matters related to raw materials and geosciences. The German Mineral Resources Agency (DERA), which is an agency of the BGR, is responsible for monitoring raw materials and for providing businesses and policymakers with information, for example about which renewable technologies may be relevant in the future.

Metrology and measurement procedures

Maintaining a sophisticated and reliable metrology system is key to developing new technologies, trading fairly, and safeguarding citizens’ quality of life. Our legal framework therefore needs to be designed in a way that takes account of the emergence of new innovations, takes account of digital change, and stays abreast of new technological developments (such as smart meters), whilst at the same time being flexible enough to allow for the development of more economically efficient procedures.

Standardisation

The German Institute for Standardization (DIN) is responsible for standardisation in Germany. As a partner of industry, research and society, DIN plays a major role in supporting the marketability of innovative solutions through standardisation, for example in areas related to the digitisation of industry and society and in research projects.

Standards define the requirements for products, services and processes. They facilitate the free movement of goods, enhance the safety of people and products, and contribute to quality assurance in business, technology, science and administration. Standardisation is a pillar of the quality infrastructure in Germany.

Accreditation and conformity assessment

Accreditation makes it possible to compare conformity assessment certificates and to establish confidence in these assessments among businesses and within the public administration. In the Federal Republic of Germany, the sovereign tasks of accreditation are performed by the Germany’s national accreditation body ‘Dakks’. Accreditation provides a means to test and assess the level of expertise of conformity assessment bodies. In order to become accredited, a conformity assessment body needs confirmation from an independent third party that it possesses the specialist expertise to carry out specific conformity assessment activities. It is the foundation upon which the consumer is able to reliably establish the quality of a given product or service.

Accreditation and conformity assessment are therefore important parts of quality infrastructure.

Global quality infrastructure project

In order to promote internationally harmonised quality assurance infrastructure systems, the Federal Ministry for Economic Affairs and Energy has launched the global quality infrastructure project ‘GPQI’. Together with support from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), it conducts expert policy dialogues on quality infrastructure issues with selected trading partners of Germany. The project focusses on standards, different testing and certification requirements, governmental product safety controls and other issues. The measures taken under the project serve to develop a coordinated quality infrastructure as a basis for fair, efficient and safe trade.

Quality infrastructure in the digital age

Quality infrastructure forms an important basis for technical innovation and development. The digitisation of the economy, online trade, Industry 4.0, electric mobility and artificial intelligence are just some of the key topics of that the quality infrastructure must address in an adequate manner. Only if an efficient quality infrastructure has been established will it be possible to create the trust required for successful technology transfer. For this reason, important actors such as the BAM, DAkkS, DIN, DKE and PTB are further developing quality infrastructure within the working group ‘QI-Digital’. This work is part of the Federal Government's implementation strategy for shaping the digital transformation.

Innovative procurement

Providing incentives for delivering innovative public procurement processes

As a major purchaser of new products and services, the public sector can stimulate innovations by businesses. Each year, the Federal Government, the German Länder, municipalities, and public-sector companies buy products and services worth more than €350 billion. There is still scope, however, to increase the share of innovative products, services and systems. This can help innovative SMEs, in particular, to get market access for their innovative products and services.

The Centre of Excellence for innovative procurement

The Centre of Excellence for innovative procurement (KOINNO), which receives funding from the Federal Ministry for Economic Affairs and Energy, advises public procurement officers on how to improve public procurement processes and buy more innovative products. In addition, KOINNO offers a broad range of online further training options. Procurement entities which properly implement the expertise gained in these courses can apply for a KOINNO certificate as proof of their innovation capacity. The website of the Centre of Excellence provides further information and a detailed overview of what KOINNO has to offer: www.koinno-bmwi.de

The Centre also supports procurement bodies in awarding research and development contracts for products and procedures whose results are then integrated into the procurement process. The European Commission provides funding for this purpose that is also available to applicants from Germany.

The Centre of Excellence awards a number of prizes to honour the procurement of innovative products and innovative public procurement processes. All public sector procurement bodies in Germany can compete. Every year, the winners are awarded their prize at the Economic Affairs Ministry on the Day of Public Purchasers.

Further information

  • 18/01/2019 - Press release - Funding of SMEs

    Minister Altmaier: Unicorn wanted at the 2nd Pitch Night of the Digital Hub Initiative hosted by the Federal Ministry for Economic Affairs and Energy

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  • 18/07/2018 - Joint press release - Key Enabling Technologies

    Key points for a Federal Government Strategy on Artificial Intelligence

    Open detail view
  • 27/06/2018 - Press release - International Cooperation

    Altmaier welcomes representatives of more than 20 countries to a transatlantic innovation forum

    Open detail view
A blackboard with math formulas connected to innovation policy