Is Germany more innovative than ever before?

In 2024, Germany invested more money in innovation than ever before: according to the latest innovation survey by ZEW Mannheim, companies spent around €213.3 billion on innovation – a new record high. Nevertheless, the German economy is losing momentum in international competition. In the ZEW podcast “Wirklich Wirtschaft”, Dr. Christian Rammer, Deputy Head of the Research Unit “Economics of Innovation and Industrial Dynamics”, explains why record budgets alone are not enough to strengthen innovation in the long term and where the main obstacles to innovation in Germany lie. The podcast is available on all popular podcast platforms, such as Spotify, Apple Podcasts and Deezer, as well as on the ZEW website.

Rammer makes it clear that several forces are driving innovation spending upwards: one important factor is inflation, which generally makes innovation projects more expensive. In addition, the central cost and productivity factor in innovation is people – rising labour costs therefore have a direct impact on innovation budgets. At the same time, increasing international competition in innovation is creating additional pressure: more and more economies are relying on innovation as a competitive strategy, making it more difficult for German companies to stand out from the crowd. Structural challenges such as high energy prices, changing sales markets and trade barriers are also forcing companies to adapt and thus to innovate.