Germany is the Most Innovative Economy in the World, Says World Economic Forum

Germany innovative economy

Germany is currently leading the innovation race – thanks in part to the speed it’s developing new technologies like driverless cars.

Germany came top as the world’s most innovative economy in the World Economic Forum’s latest Global Competitiveness Report. The country scored 87.5 out of 100 in the Innovation capability pillar – one of the 12 drivers of a country’s productivity, reports World Economic Forum.

The country outperformed the US, the world’s most competitive economy, which came second for innovation (86.5), with Switzerland in third place (82.1).

Innovation is one of the key pillars of competitiveness, in the World Economic Forum repot. But, many countries perform poorly in this area.

According to the new index, the speed at which countries can adopt new ideas, methods and products will give them a competitive edge as the Fourth Industrial Revolution continues apace.

This innovation ecosystem is measured by five sub-pillars: Commercialization, Interaction and diversity, Administrative requirements, Research and development, and Entrepreneurial culture.

But other factors determine a country’s ability to innovate, including ICT adoption, quality of education and intensity of competition.

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The two ‘super-innovators’ Germany and the US stood out from other innovators such as Korea and Japan for the ‘softer’ drivers of innovation, coming under the Entrepreneurial culture and Interaction and diversity sub-pillars.

What makes Germany a super innovator?

Germany’s position as the world’s top innovator is due in part to the sheer number of ideas it comes up with – many in the automobile industry, where it’s focusing on digitally-networked mobility, driverless vehicles and electric mobility.

Germany innovative economy

In the Forum’s index, the country that invented the MP3 player and fuel cell ranked 5th for patent applications, with 295.32 per million population.

The index also found that a high degree of buyer sophistication (66.1) meant companies were being constantly challenged to innovate, while innovators benefited from a vibrant business sector to bring innovations to market (81.6, 2nd place).

To achieve this, it spends 2.9% of GDP on research and development (R&D) – in 10th place.

While some governments responded to the global economic crisis by cutting spending on R&D, Germany actually increased funding for small and medium-sized enterprises and e-mobility projects.

This commitment to R&D means that German carmakers are now shaping the future. In 2017, 2,633 patents were applied for in the area of driverless vehicles, a 14% increase on 2016. Volkswagen, the biggest carmaker in the world, spent 11.6 billion euros on R&D in 2017, placing it 5th in the world for R&D spend behind Amazon in first place with 20.1 billion euros.

In 2017, a total of 128,921 patents were registered with the German Patent and Trade Mark Office (DPMA), the largest in Europe and the fifth largest in the world, and one in three patent applications in Europe came from Germany.

As the DPMA explains: “Protecting innovative companies makes the individual firms – and Germany as a location for industry – more competitive. Consumers also profit from innovative products.”

Germany’s top educational institutions also play a key role in helping to turn the country into an innovation powerhouse. None of this innovation would be possible without public and private research institutions.

German universities publish a huge number of research publications. In the Forum’s index, Germany came third for the quality of its research publications and fourth for the quality of its institutions, scoring 100 for each.

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Germany has more than 1,000 public and publicly funded institutions for science, research and development, almost 600 research and innovation networks and clusters, and 614,000 staff in R&D including 358,000 researchers.

The country’s main goal, as outlined by the Federal Ministry of Education and Research in its High-Tech Strategy, is for science and industry to work together to “move Germany further down the path to becoming the global innovation leader”.