The project analyses, how R&D expenditure of firms in Saxony-Anhalt can be increased in order to raise the R&D intensity of the Saxony-Anhaltine economy. Based on an investigation of obstacles to innovation and potentials for more innovation, the study identifies policy options based on the existing policy framework and the available mix of policy instruments. ZEW’s contribution to the project focuses on identifying innovation activities and innovation barriers in firms and to determine the potential for additional R&D expenditure within existing firms and through start-ups.