ZEW Press Release: Innovation: Business-related Service Providers a Weak Spot of the East German Economy

IT, technical, consulting and financial service providers are the weak spot in the East German innovation system. Whereas East German enterprises on the whole have largely adjusted to the West German level in terms of innovation activity, business-related service providers are still lagging far behind their West German competitors in that regard.

This has negative effects on the entire East German economy since business-related service providers play a major part in innovation activity. In 1999, the share of innovators in that sector stood at 56 per cent – about eight per cent below that for Germany as a whole. This means that only slightly less than 13,000 business-related service providers in East Germany introduced new products or improved their processes. Neither does looking at the innovation expenditure in this sector give much ground for optimism since spendings on innovation have been stagnating for many years at around 2.5 billion marks. This is the result of the latest innovation survey conducted by the Centre for European Economic Research (ZEW), Mannheim, on behalf of the Federal Ministry for Education and Research (BMBF). Approximately 4,000 enterprises participated in this representative survey on innovation activities. ZEW projected the survey results for Germany.