- KfW Highlights Germany's Correspondence to Digital Technological Advancements, Revealing a Potential Lag in Development.
Germany falls behind significantly in the innovation and utilization of digital technologies compared to other nations, as revealed in a recent study conducted by the KfW development bank, released in Frankfurt. This study uncovers a noticeable disparity in scientific literature and patent applications pertaining to digital technologies, along with lower levels of IT spending by companies.
The bank cautions of potential substantial financial setbacks due to this digital transformation shortcoming, emphasizing the urgent need for action by both politics and businesses. As per KfW's chief economist, Fritzi Köhler-Geib, "Germany may require a lengthy breath to match the pace of leading countries in digital technology research and usage."
Ample space to lead competitors
Based on the study, China and the USA publish roughly five and a half and four times as many scientific papers on digital technologies as Germany, respectively. In the realm of patent applications specifically for digital transformation, Japan takes the lead, followed closely by the USA. These nations file almost three times the number of patents as Germany, which is well ahead of France. Additionally, according to KfW, Germany imports more goods based on digital technology than it exports abroad.
Furthermore, KfW's analysis reveals subpar investment in digitalization by German companies. In 2022, companies only allocated 1.4% of GDP to IT investments, which is identical to the spending rate from 2019. To close the gap with highly developed countries, Germany's IT investments should ideally increase to around 140 to 180 billion euros per year, equating to double or even triple the current volume.
Strong technological footing in key sectors
KfW suggests reinforcing fundamental research in digital technologies within Germany. Moreover, they encourage politicians to support business R&D and improve infrastructure to guarantee companies like reliable internet connections. There is also promising news, according to Köhler-Geib, KfW's chief economist. For example, "the high-quality research in artificial intelligence is globally recognized." Furthermore, Germany boasts strong technological capabilities in sectors such as robotics and autonomous driving.
The Commission recognizes the need for action to bridge Germany's digital gap and has the authority to adopt implementing acts laying down the rules for the application of regulations promoting digital transformation. Without significant improvements, Germany risks falling behind in the global digital economy, jeopardizing its competitiveness and economic growth.
