A new study by KfW, Germany’s state-owned development bank, reveals that the country is significantly behind in researching and utilizing digital technologies. The bank warns of substantial economic losses if Germany fails to catch up in the digital transformation race.
Digital deficit: Research, patents, and investments
Germany is falling behind major countries in digital technology research and application, according to a study published by KfW in Frankfurt. The report highlights Germany’s lag in scientific publications, patent applications for digital technologies, and IT investments by companies.
KfW’s chief economist, Fritzi Köhler-Geib, states, “Germany will need a long breath to catch up with leading countries in researching and using digital technologies.” The bank warns that failing to succeed in digital transformation could result in significant losses in prosperity, emphasizing the need for counteraction by both policymakers and businesses.
Comparative analysis with global leaders
The study reveals stark differences between Germany and global leaders in digital innovation:
- Scientific publications: China and the USA publish nearly six times and four times as many scientific studies on digital technologies as Germany, respectively.
- Patent applications: Japan leads in digital transformation patent applications, followed by the USA. These countries file almost three times as many patents as Germany, although Germany significantly outperforms France.
- Foreign trade: Germany imports more goods based on digital technologies than it exports.
- Corporate IT investments: German companies’ digitalization expenditure is relatively low. In 2022, businesses spent only 1.4% of GDP on IT investments, unchanged from 2019. To catch up with other highly developed countries, Germany’s IT investments would need to increase two to three-fold, reaching approximately 140 to 180 billion euros annually.
Recommendations and positive aspects
KfW recommends strengthening basic research in digital technologies in Germany. The bank also advises policymakers to promote corporate research and development while expanding infrastructure to ensure good internet connections for all companies.
Despite the challenges, Köhler-Geib notes some positive aspects: “For example, high-quality academic research in artificial intelligence is highly valued internationally.” Additionally, Germany has technological strengths in areas such as robotics and autonomous driving.
To address these issues, Germany will need a concerted effort from both the public and private sectors to boost its digital capabilities and remain competitive in the global technological landscape.
