ZEW Economist Christian Rammer on the Innovation Survey

By strategically increasing innovation expenditures, Germany can not only drive technological advancements but also create new jobs and foster sustainable economic growth. Dr. Christian Rammer, deputy head of the Research Unit “Economics of Innovation and Industrial Dynamics” at ZEW Mannheim and project leader of the Mannheim Innovation Panel (MIP), explains:

“In 2022, innovation expenditures of the German economy rose significantly by 6.8 per cent to 190.7 billion euros. This marks the highest value ever recorded. Expenditures increased much more than firms originally anticipated in spring/summer of 2022. Higher investment in new products and processes is generally to be welcomed, as it strengthens the central pillar of Germany’s economic competitiveness by offering innovative products and producing them highly efficiently.

However, the increase needs to be put into perspective. Firstly, total innovation expenditure had stagnated in the last two years. Secondly, the surge occurred in a context of inflation, and part of the growth can be attributed to increases in the price of inputs for innovation (personnel, pre-production). At the same time, the projected figures for 2023 do not foresee any further increase. The outlook for 2024 is very bleak and marked by high uncertainty. Therefore, continued efforts from both the government and firms are needed to maintain investments in innovations at a high level.”