1. Innovation Policy in Germany – Strategies and Programmes at the Federal and at the Regional Level Alexander Eickelpasch, German Institute for Economic Research (DIW Berlin), Berlin, Germany New Industrial development and system-based policies Villa Medicea di Artimino, 9 October 2012
DIW Berlin is
My expertise is on
1990 until 2003 involved in Projets for the FM of Ec Affairs on german unification

2. Agenda
The German research and innovation system
R&D and innovation policies of the states
Programmes by criteria broken down by states
Volume of the federal broken down by states
Project funding from the perspective of the companies funded
Conclusions

3. 1
The German research and innovation system

4. 1 The German Research and Innovation System Where does R&D take place?
2009: 6,7 bn, 2.82% of GDP : 5,5 bn (2.51%)
Private enterprise sector:
LE (84%),
AiF (consortium for Industrial Research Associations)
Government and private non-profit sector:
Max-Planck institutes (MPG), Fraunhofer-Gesellschaft (FhG), Helmholtz Association (HGF), Leibniz Association (WGL),
federal government and state government research organisations

5. 1 The German Research and Innovation System
Innovation and technology support for SMEs
Funding of R&D by government
Institutional Funding (of PROs; long term; 42% of fed. exp.)
PROs MPG, FhG, DFG, HGF, WGL
Funders are the BMBF, BMWi, partly in cooperation with the federal states (Joint Science Conference (GWK) acc. to Art. 91b of the German Basic Law)
Project funding (target oriented, short to medium-term; 50%)
Direct (specific research/ technology area e.g. biotech, nanotech, aviation, transport, energy, environment, IT)
Indirect (technology open)
Insitutionelle Förderung: 2010: 7 Mrd Euro, 4,9 bund, 2,1 Länder (Tabelle 12 3/3 Bufi, S. 440)
Innovation and technology support for SMEs is part of a broad system of innovation policies. Further components are
“Mission oriented” programmes . Those programme are launched by different federal ministries, mainly the Federal Ministry of Education and research (BMBF), the Federal Ministry of Economics and Technology (BMWi), and the Federal Ministry of Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
Funding of research institutions over a longer period of time in order to assure competence and strategic orientation of the German landscape (MPG, FhG, DFG, HGF, …). Innovation-friendly framework conditions, such as regulation of intellectual property venture capital, tax relief, …
Innovation and technology support for SMEs is also part of the “High-Tech Strategy 2020 for Germany” of the German Government. The strategy is a comprehensive national strategy which bundles R&D activities from various fields of in line with the long-time tradition in German innovation policy. The HighTec Strategy defines five major demand fields derived from the global challenges and relevant for the German society – climate/energy, health/nutrition, mobility, security, and communication.

6. 1 The German Research and Innovation System
Innovation and technology support for SMEs
Insitutionelle Förderung: 2010: 7 Mrd Euro, 4,9 bund, 2,1 Länder (Tabelle 12 3/3 Bufi, S. 440)
Innovation and technology support for SMEs is part of a broad system of innovation policies. Further components are
“Mission oriented” programmes . Those programme are launched by different federal ministries, mainly the Federal Ministry of Education and research (BMBF), the Federal Ministry of Economics and Technology (BMWi), and the Federal Ministry of Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
Funding of research institutions over a longer period of time in order to assure competence and strategic orientation of the German landscape (MPG, FhG, DFG, HGF, …). Innovation-friendly framework conditions, such as regulation of intellectual property venture capital, tax relief, …
Innovation and technology support for SMEs is also part of the “High-Tech Strategy 2020 for Germany” of the German Government. The strategy is a comprehensive national strategy which bundles R&D activities from various fields of in line with the long-time tradition in German innovation policy. The HighTec Strategy defines five major demand fields derived from the global challenges and relevant for the German society – climate/energy, health/nutrition, mobility, security, and communication.

7. 1 The German Research and Innovation System Indirect project funding
BMWi
BMBF
Funding of R&D projects
SME Central Innovation Programme (ZIM) X
ZIM-SOLO
ZIM-KOOP
KMU-innovativ
Enterprise Region
Soft loans
ERP Innovation Programme
Promotion of Hightech start ups
HighTec Start up Fund
EXIST
Promotion of technology transfer
Collective Industrial Research (IGF)
INNO-KOM-Ost
Cluster policies
(Competence networks Germany)
(ZIM-NEMO)
Indirect project funding
Most SME programs by the BMWi are “technology neutral”
The following table provides an synopsis about the most important programmes which aim at strengthening R&D and innovativeness of SMEs in Germany. The table classifies the programmes in those which
finance specific R&D projects in SMEs,
fund the new companies,
fund or support the transfer of technologies and knowledge, and
support the organisation of networks and clusters SMESs are part of.
It becomes apparent that most of the programmes for SMEs are run by the Federal Ministry of Economics and Technology (BMWi), and only two by the Federal Ministry of Education and Research (BMBF). In Germany there are 16 federal states which also play an important role in innovation policy. They vary in their policy strategies very much which is also due to the differences in the industrial structure of the regions. To present all the different federal states approaches and programmes would exceed the frame of this presentation. It is however important to know that according to their self-conception the federal states offer complementary programmes to the programmes on the federal level and the EU which are tailored to regional conditions. Most of the federal states ministries have launched a programme called “innovation assistant” by which SMEs get reimbursed part of the salary for an employee which graduated from a German university and started his career in the company. Nearly all of them also have programmes for facilitation of regional or local network and clusters.
Also to mention are the activities of the European Union, mainly the programme „Eurostars” which is a programme that funds R&D projects in SMEs with international cooperation, and the EU framework programme.
In the following some of the most important programmes are presented. The presentation is on the objectives and the funding conditions and also comprises some remarks on the effectiveness of the programme.

8. 1 The German Research and Innovation System
Innovation and technology support for SMEs
BMBF the most important funder of R&D project funding, mostly direct funding
Followed by the BMWi, mostly indirect SME funding

9. 1 The German Research and Innovation System
Innovation and technology support for SMEs
2011:
Expenditures in 2011: bn. Euros, 2005: 7.8 bn. Euros
Including die PROs. NUR AN UNTERNEHMEN: 2,6 bn von 12,7 bn (2010)!!!!!

10. 2
R&D and innovation policies of the states

11. 2 R&D and innovation policies of the states
Innovation and technology support for SMEs
The federal structure allows the states to pursue R&D and innovation policies independently from the policies at the federal level.
The main aim of the policies is to address the specific strengths of the state in terms of technology and industry
Variety of measures
Criteria for the comparison of the individual state strategies
Technology orientation (technology specific, not technology specific)
Type of funding (single or cooperative project, consulting service, network management, soft loans)
Beneficiary of the programme (companies, only SME, etc.).
Sources:
Official data bank “
Inquiry by DIW Berlin on behalf of the BMWi
Further possible criteria:
Beneficiary: Startups, companies, research organisation
Technolgy open, technology specific
Soft loan, grant

12. 2 R&D and innovation policies of the states
Innovation and technology support for SMEs
Consulting servive: Innovtion voucher! Sehr beliebt geworden. Pendant zu einem BMWi Programm
Mostly complementary to the programs at the federal level
Most programs are technology open, Technology programs are mostly broadly defined
Some states allocate funding by contests (NRW)

13. 2 R&D and innovation policies of the states
Federal and state funding directly to SME1), in Mio. Euro
1 Assumption: 50% of the technology open directly to SMEs.
without NRW und Schleswig-Holstein, 2006 without NRW.
Sources: Bundesbericht Forschung und Innovation 2012 und 2010, Inquiry of the states; Calculations by DIW Berlin.
250
500
750
1 000
1 250
2005
2006
2007
2008
2009
2010
2011
188
227
264
252
228
306
239
249
380
281
292
327
350
366
450
487
418
420
545
456
BMWi, technology open
Federal government, technology specific
States, to companies 2
Funding by the states
One third of the funding by the states
Number of programs has increased
Co financed by EFRE and ESF
Future financing unclear

14. 2 R&D and innovation policies of the states
Innovation and technology support for SMEs
Volume of funding at state level
Increased in the last years ( : 28%), growth however not continuously
In strong states funding is low (BW, Bavaria)
Innovation and technology support for SMEs is part of a broad system of innovation policies. Further components are
“Mission oriented” programmes e.g. biotech, nanotech, aviation, transport, energy, environment, IT. Those programme are launched by different federal ministries, mainly the Federal Ministry of Education and research (BMBF), the Federal Ministry of Economics and Technology (BMWi), and the Federal Ministry of Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
Funding of research institutions over a longer period of time in order to assure competence and strategic orientation of the German landscape (MPG, FhG, DFG, HGF, …). Funders are the BMBF, BMWi, partly in cooperation with the federal states
Innovation-friendly framework conditions, such as regulation of intellectual property venture capital, tax relief, …
Innovation and technology support for SMEs is also part of the “High-Tech Strategy 2020 for Germany” of the German Government. The strategy is a comprehensive national strategy which bundles R&D activities from various fields of in line with the long-time tradition in German innovation policy. The HighTec Strategy defines five major demand fields derived from the global challenges and relevant for the German society – climate/energy, health/nutrition, mobility, security, and communication.
In this presentation the aim and the core areas of the German technology and innovation policy are addressed in two ways, first in general and second for those programmes which are especially designed for SME. Also the main institutions in the field of innovation policy, such as the BMBF, the BMWi and the 16 federal states, and the division of labour between these institutions are introduced.

15. 2 R&D and innovation policies of the states
SME, which used 2005 to 2010 R&D and innovation funding (%) 20 40 60 80
Technology open programs
ZIM-SOLO, INNO-WATT
ZIM-KOOP bzw. PRO INNO II
INNO-KOM-Ost and IVF
KfW-programs
State programs
Project funding
innovation assistent
other
Technology specific programs
BMWi
BMBF
KMU innovativ
Unternehmen Region
Other federal programs
EU programs
The R&D and innovation policy from the company perspective:
Technology open programs are widely used
State programs play a secondary role
N = 3.010, Source: Survey conducted by DIW Berlin 2011.

16. 3
Conclusions

17. 3
Conclusions
State funding is a major part of the German innovation policy,
plays a complementary role,
is focussed on the needs of the states
will suffer in the future as it is strongly financed by EU, role of Horizon 2020 is unclear
Summary
The presentation has shown that German SMEs are supported with a broad variety of programmes in order to strengthen their research and innovation activities. Some programmes fund R&D projects, either a single projects or a project in co operation with universities, research institutes or other companies. Project funds do not fund the whole R&D budget of a company. Another type of programmes facilitates financing of high-tech start ups. A third type supports the technology and knowledge transfer from universities and research facilities.
There is a division of responsibility between different promoters. The BMWi is the main responsible ministry for SME innovation policy measures. However other federal ministries and the federal states offer special programmes for SMEs. The BMBF is the main responsible for mission oriented programmes which are open to all companies small and large ones.
The SME Central Innovation Programme (ZIM) is the most important programme, as it offers a variety of funding (single projects and projects in co operation), is very much appreciated by the companies who used it, and is the biggest programme in terms of amount of funding.
Innovation and Technology Support for SMEs is also integrated into the High-Tech Strategy 2020 for Germany.
Conclusions
All in all, the system of innovation policy measures for SMEs is well integrated into the German innovation policy. However, there is need for streamlining, also because framework conditions are changing continuously.
The aim of innovation policy is to stimulate R&D and innovation activities and behaviour in SMEs. Policy maker should continue their efforts in order to raise the number of SMEs with (continuous) R&D and to encourage SMEs to co operate.

18. Thank you very much for your attention
Alexander Eickelpasch
DIW Berlin — German Insitiute for Economic Research
Mohrenstraße 58, D Berlin, Germany

19. 1 The German Research and Innovation System
Innovation and technology support for SMEs
Volume of funding at state level
In strong states funding is low (BW, Bavaria)