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Ranking and Atlas: Germany’s most innovative economic regions

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Ranking and Atlas: Germany’s most innovative economic regions

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Germany’s prosperity depends heavily on the innovative strength of companies. The transition to a carbon-neutral economy makes this even more important.

Within Germany there is a strong, three-fold gradient: from south to north, from west to east and from city to country. This is the result of the innovation atlas of the German Economic Institute (IW).

The IW has examined patents, tech workers and startups, and companies’ research spending, among other things. The south is usually ahead, but the most innovative economic region is neither in Bavaria nor in Baden-Württemberg.

Germany’s prosperity depends heavily on the innovative strength of the company away. This is the only way Germany can maintain its position as an industrial country with strong exports, since it is poor raw materials is. The lack of labor and the transition to a climate-neutral economy make inventions, new products and processes even more important. How innovative is it in Germany, how do the regions differ? Where are the most jobs in innovative companies? That has that Institute of the German Economy (IW Cologne) in its innovation atlas examined.

The IW compared criteria such as companies’ expenditure on research and development (R&D), the number of high-tech jobs, tech start-ups and patent applications. The researchers come to a clear conclusion. There is a pronounced, three-fold gradient in Germany: the innovative strength decreases from south to north, from west to east and from city to country. Compared to 2017, the gap has increased. Most of the most innovative economic areas are in Bavaria and Baden-Württemberg. But there are exceptions – and developments that can give hope to the north and east of Germany.

1. Research and development expenses

Ten years ago, the European Union set itself the goal of reducing research and development spending to three percent of the gross domestic product (GDP) to increase. Overall, EU countries spent just 2.3 percent of GDP on research and development in 2020. Germany, on the other hand, already reached the three percent target in 2019 with 3.2 percent. Around three quarters of the expenses are borne by companies and a quarter by the state, primarily in basic research.

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Corporate spending is distributed very differently from region to region. Among the federal states, the companies in Baden-Württemberg are far ahead of Bavaria with 2.9 percent, with R&D expenditures of 5.3 percent of economic output. Bringing up the rear are Brandenburg, Mecklenburg-Western Pomerania and Saxony-Anhalt with values ​​between 0.7 and 0.44 percent. These low values ​​roughly correspond to the research intensity in Greece or Russia, writes the IW. Baden-Württemberg and Bavaria, on the other hand, are also far ahead in an international comparison of countries.

Looking at economic areas is even more important than looking at the federal states. In countries like Lower Saxony there are regions that are extremely innovative as well as regions that are extremely weak. Some closely networked economic areas are located in several federal states.

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The following map makes the differences in Germany clear: It divides the R&D intensity of companies in economic regions into four quarters. The regions with the highest R&D intensity are shown in dark blue, the second quarter is shown in light blue, the third quarter is shown in light gray and the weakest quarter is shown in dark grey.

It is not a region in the south that achieves the best value, but the economic area of ​​Wolfsburg/Brunswick. This is due to Volkswagen’s billions in research and development spending. Among the five strongest R&D regions are Stuttgart and Ingolstadt, two other locations with an automotive industry. The values ​​are lowest in Emden and Cottbus, where R&D expenditure by companies accounts for only 0.1 percent of economic output. Since the first IW study in 2017 by the IW, the gap in R&D intensity has increased.

IW Cologne

2. Tech jobs

The proportion of academically trained workers in technical and scientific occupations (MINT) in all employees was examined. Nationwide, the number of these “MINT graduates” in companies rose by around 25 percent from 1.1 to 1.4 million between 2014 and 2019.

If you look at the federal states, the city of Hamburg is at the top with 55 MINT graduates per 1000 employees – again just ahead of Baden-Württemberg and Bavaria with 54. In Mecklenburg-Western Pomerania and Saxony-Anhalt the density of such tech employees is only about half so tall.

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Again there is a south-north divide, a west-east divide and a particularly pronounced town-country divide. What is striking for the IW researchers is that the western state of North Rhine-Westphalia, with its 30 major cities, is benefiting less from this.

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“A rapidly positive development of the academic STEM employees” determine the IW researchers for Berlin. One reason for this is the rapidly growing digital industry and the far above-average start-up activity of companies from innovation-relevant sectors.

The Wolfsburg region is also the leader in this ranking. Here, the density of MINT academics is also significantly higher than in Hamburg, at 106 per 1,000 employees. The regions of Munich (90), Ingolstadt (72) and Stuttgart (70) follow. In the automotive industry in particular, the proportion of tech specialists has increased significantly since 2014. In the east, Dresden has a high value of 45. There are also many strong regions in Thuringia.

IW Cologne

3. Tech-Startups

“Entrepreneurship plays a crucial role in an economy’s ability to innovate and compete,” says the report. However, the researchers only looked at startups with high research and knowledge intensity, i.e. tech startups in a broader sense.

The number of tech start-ups per 10,000 active companies was evaluated. With this criterion, the south-north and east-west divide is less pronounced, while the urban-rural divide is stronger. The front runner among the federal states is the city state of Bremen (21), ahead of Baden-Württemberg (20) and Berlin (19).

Looking at the economic regions, the Rottweil and Tuttlingen areas in the Black Forest are ahead. There, the IW counted 32 tech startups for every 10,000 companies. The map again divides the economic regions into four quarters, which are color-coded as above.

IW Cologne

4. Patent Applications

“Patents are one of the most meaningful indicators of innovative strength,” writes the IW. Because they are the result of research and development. Here, too, there is a strong gradient from south to north and from west to east. The clear leader among the federal states is Baden-Württemberg with 321 patent applications per 100,000 employees. Bavaria still has 236, the following states of Lower Saxony, North Rhine-Westphalia and Hesse still have a good 100. In Mecklenburg-Western Pomerania, on the other hand, it is only a fraction of this with 23 patents per 100,000 employees.

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“Almost all economic areas in Bavaria and Baden-Württemberg belong to at least the top 50 percent, most even to the top 25 percent,” writes the IW. Among the ten most patent-active economic areas, the Wolfsburg car region is only one that is not in the south. Only in 15th place did Aachen, with its strong technical university, come second. With 111 patent applications per 100,000 employees, Jena is in 39th place.

IW Cologne

5. Result: The most innovative regions in Germany

The IW also combines the individual criteria into an overall ranking of the economic regions. The researchers look at the current situation, but also at the changes since the first study in 2017.

Four economic regions are currently at the top: the metropolitan areas of Stuttgart, Braunschweig/Wolfsburg, Karlsruhe and Munich. Aachen is the first region from NRW to be in ninth place. The most innovative region in the East is Jena in 27th place, ahead of Berlin in 32nd place. At the bottom are Prignitz in Brandenburg, Lüchow-Dannenberg in Lower Saxony, the Eastern Harz Mountains in Saxony-Anhalt, Trier in Rhineland-Palatinate and Pirmasens in the Southwest Palatinate.

If you look at the dynamics, i.e. the improvements in innovative strength, there are – in some cases – different sequences. With Braunschweig/Wolfsburg and Ingolstadt, two car regions are also among the top four. Supplemented by the metropolitan areas of Heilbronn and Heidelberg/Mannheim in Baden-Württemberg. Despite its startup scene, Berlin is only in 50th place. The most dynamic eastern region is Dresden in 38th place.

More data from the study and information on the methodology can be found here.

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