“The Crisis Could Also Catalyse the Transition to New Technologies”

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In February 2021, the Commission of Experts for Research and Innovation (EFI) presented its annual report to the German Chancellor Dr. Angela Merkel. As part of the lecture series “First-Hand Information on Economic Policy”, Professor Irene Bertschek, head of the ZEW Research Department “Digital Economy” and EFI member, and Rafael Laguna de la Vera, founding director of the Federal Agency for Disruptive Innovation (SPRIN-D), discussed the EFI report as well as ways to promote disruptive innovations in Germany. The event was supported by the ZEW Sponsors’ Association for Science and Practice and held within the framework of the SEEK research programme.

Professor Bertschek opened the event with a keynote speech on the main findings of the latest EFI report. As one of its core topics, this year’s report focuses on the effects of the COVID-19 crisis on research and innovation (R&I) in Germany. “The majority of businesses in Germany have seen a pandemic-related negative impact on their innovation activities: Around 32 per cent of firms in the information economy and 45 per cent in the manufacturing industry have postponed innovation projects due to the pandemic,” explains Bertschek. While only a small share of firms reported that they have completely abandoned innovation projects (11 per cent in the information economy and 17 per cent in the manufacturing industry), a total of 24 per cent of businesses information economy and 38 per cent in the manufacturing industry stated that they have not taken up previously planned projects.

The most common reasons for this negative impact were the reduced availability of financial resources, a falling demand for innovative products and services and supply difficulties for materials and intermediate inputs. In addition, firms were asked to assess the federal government’s package of measures, the so-called ‘Zukunftspaket’, which includes substantial investments in education, research and innovation. Around 60 per cent of companies in the information economy and more than half of the firms in the manufacturing industry especially welcomed the measure to expand Germany’s 5G fibre-optic network, which, according to the surveyed companies, would have a particularly positive impact on their innovation projects. The respondents were also in favour of the plans to increase tax incentives for R&D and investments in artificial intelligence. “The emergency measures and stimulus programme of the federal government provide important impulses and will create a positive impact on the R&I system. However, we as an expert commission consider it very important that the support funds are now paid out quickly,” said Bertschek in front of an online audience of around 160 viewers. According to Professor Bertschek, the coronavirus crisis could catalyse the transition to new technologies and improve the competitiveness of the German economy. Future stimulus measures should be designed with the greatest possible focus on R&I, argued the EFI member.

Germany is lagging behind in the implementation of innovative applications

Further key issues featured in the EFI report also include the new mission-oriented and agile approach to R&I policy, adapting vocational training and education to the digital transformation, and gene editing using the CRISPR/Cas method, a tool that offers new insights into basic research as well as new therapeutic approaches for a number of illnesses. “While Germany is currently in a good position in this area of research, there are still shortcomings when it comes to translating scientific findings into actual applications. This problem is common for many technologies and innovations in Germany,” highlighted Bertschek. According to the ZEW economist, barriers like complex application and approval procedures and high administrative hurdles for research and clinical studies are standing in the way of a fast implementation of innovative applications. In addition, the report concludes that the German economy is facing a shortage in venture and growth capital for highly innovative firms.

Towards the end of her speech, Bertschek presented the Commission’s proposals on how to design R&I policy for the future, which includes addressing major social challenges like demographic change or climate protection and making up for lost ground in the area of technological advances, for instance in the field of digitalisation. According to the EFI, it is also crucial to ensure a wide pool of skilled workers, increase the participation of small and medium-sized enterprises in innovation and make R&I policy-making more agile.

SPRIN-D targets disruptive innovations

On the initiative of the EFI, SPRIN-D, the Federal Agency for Disruptive Innovation, was founded in 2019. In his discussion with Irene Bertschek, Founding Director Rafael Laguna de la Vera explained how this agency came to be and what its goals are: “The mission of SPRIN-D is to find ‘high potentials’ in research institutions, universities and businesses and assist them before, during and after the launch of their company. We create teams that have the potential to develop and implement disruptive innovations – i.e. products, services and systems that can make a noticeable and sustainable improvement in our lives,” said Laguna de la Vera. The agency supports and promotes projects like these. It usually takes two to four years to know whether a project shows potential for success. If not, the agency withdraws funding for this project.

“What kind of disruptive innovations does SPRIN-D support?,” asked Bertschek. As part of its activities, SPRIN-D promotes projects related to combating Alzheimer’s disease, analogue computing, artificial intelligence, and Sovereign Cloud Stack; it is also involved in a project carried out as part of the GAIA-X initiative, and supports innovations in the area of life sciences, environmental technologies and sustainability, explained Laguna de la Vera, adding: “Disruptive innovations often rely on a combination of several individual projects. We try to use our networks to bring together different individuals. The aim is to turn these networks into businesses based on radical innovations.” Other topics discussed at the event included, for instance, the funding instruments of SPRIN-D, innovation policies for the next legislative period, the lack of a functioning financing scheme for highly innovative companies in Europe as well as the question whether we need a digitalisation ministry in Germany.