According to KfW, Germany languished in the realm of digital technologies.
Germany is trailing behind its international counterparts in the field of digital tech innovation, as per a recent report released by KfW, a German state-owned development bank. The report highlights a gap in digital tech-related research and patent applications, as well as a low level of IT investment by businesses.
The report warns that this digital transformation gap could lead to substantial economic losses. It advocates for urgent action from both politics and businesses. KfW's chief economist, Fritzi Köhler-Geib, mentions that Germany will need considerable resilience to match the pace of leading nations in digital tech innovation.
According to the report, China and the US publish significantly more research studies on digital tech than Germany, with China leading by nearly six times and the US by nearly four times. In the realm of digital tech patents, Japan is at the forefront, followed by the US, which files nearly three times more than Germany, which exceeds France's rate by a substantial margin. Furthermore, Germany imports more digital tech-based goods than it exports, KfW notes.
Moreover, German businesses have a comparatively low budget for digitalization, revealing KfW's analysis. In 2022, they allocated only 1.4% of the GDP for IT investments, which is the same as in 2019. To meet the digital transformation pace of other developed nations, Germany's IT investments need to escalate to around 140-180 billion euros annually, more than double or triple the current allocation.
KfW proposes fortifying fundamental research in digital tech within Germany, encourages politics to aid companies in research and development, and suggest expanding infrastructure to ensure all businesses have reliable internet connections. However, there is a silver lining, Köhler-Geib writes. "For instance, the top-notch academic research in the field of artificial intelligence is highly appreciated internationally." Moreover, Germany has strong technological capabilities in areas like robotics and autonomous driving.
The report urgently calls on politics and businesses to take action, as suggested by KfW's chief economist, Fritzi Köhler-Geib. The Commission should consider implementing policies to boost IT investments and digital tech research in Germany.
Despite the challenges, Germany's strengths in areas like artificial intelligence and autonomous driving, as acknowledged by Köhler-Geib, provide a foundation for the Commission to build upon in its efforts to close the digital tech innovation gap.
