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Germany - European Semester

The Europe 2020 Strategy set a 3% objective for R&D intensity for the EU as a whole and most Member States have adopted a national R&D intensity target for 2020. The European Semester, the EU's annual cycle of economic policy coordination, undertakes a detailed analysis of the EU Member States’ plans for R&I investment and structural reforms of national R&I systems, and provides them with recommendations.

The Annual Growth Survey 2016 highlighted that investing in R&I at national level is critical for growth and that therefore Member States should continue to prioritise public investments in R&I, ensuring their efficiency and leverage with regard to business investment. Member States need to keep up the pace of reforms to ensure an investment-friendly environment. See more information about the European Semester.

 
 

Research and Innovation Performance

The European Semester supports Member States' structural reforms in different policy areas to promote jobs, growth and investment. Research and innovation play a key role in this context. That is why the Commission gives recommendations to and closely work with the Member States to increase the performance of their national R&I systems.
Have a look and see how the country is performing.

Report year
2016
Document type
Exercise type
R&I performance
Geo coverage
Publication date
10 November 2016

European Semester Country Report

Germany is an Innovation Leader according to the European Innovation Scoreboard 2016. Public expenditure on research and development (R&D) has remained stable at around 0.9 % of GDP in recent years. Total gross domestic public and private expenditure on R&D accounted for around 2.9 % of GDP in 2014 and 2015, thus Germany almost met its Europe 2020 target of 3 % R&D spending. Business expenditure on R&D (a sub-component of knowledge-based capital) is high in Germany by international standards. Overall, however, investment in knowledge-based capital relative to GDP is lower than in some other high-income economies such as Denmark, Sweden or the US and has grown little over time. It is particularly low in the services sector (OECD, 2016b). Strong R&D investment by the manufacturing sector contributes to a high level of intellectual property rights, while R&D investment in the services sector is relatively low. In 2013, Germany filed in relation to GDP the third highest number of international patent applications under the Patent Cooperation Treaty (PCT) in the EU. Business R&D investment is increasingly concentrated in large firms. While overall business R&D investment is growing, it is increasingly concentrated in big companies, in particular in medium-high technology manufacturing sectors. At the same time, the contribution of SMEs is declining. In particular, smaller companies and those with only occasional research needs seem to have reduced their innovation activities. Most of the obstacles to innovation for SMEs stem from shortages of financial and human resources. Public support for business R&D in Germany is relatively low by international comparison and does not include tax incentives. Unlike the majority of EU and OECD countries, Germany relies entirely on direct government funding, e.g. through grants or contracts, and does not offer preferential tax treatment for business R&D expenditure. Venture capital investment has increased in Germany, but the market still remains underdeveloped by international standards. The venture capital market in Germany appears to be failing to provide in particular bigger later-stage investments. While the public funding of start-ups has developed well as a result of specific funding instruments, the framework conditions for private investors during the growth phase remain poor (Commission of Experts for Research and Innovation 2016). Despite some encouraging developments, including the dynamic start-up ecosystems in Berlin and Munich, Germany and Europe as a whole continue to lag behind the US in terms of venture capital investment in important areas of the digital economy, such as computer and consumer electronics. Some steps have been taken to support venture capital investment. The Federal Government has simplified the taxation of investment funds and has improved loss carry-forwards under the corporate income taxation system to make it easier for young and innovative companies to access equity. Further measures are being considered, including a dedicated technology growth fund to support the venture debt market. A new SME stock market segment is planned for March 2017.

Report year
2017
Document type
Exercise type
European Semester Country Report
Geo coverage
Publication date
22 February 2017

European Semester - Country specific recommendation

No Country specific recommendation for Germany on research and innovation in 2016.

Horizon 2020 Policy Support Facility (PSF)

Last update: 17/07/2018 | Top | Legal notice | Contact | Search