Research and Innovation Policy in the U.S. and Germany: A Comparison ; Studie im Auftrag des Bundesministeriums für Bildung und Forschung

Abstract

In this policy paper we analyze and compare the research and innovation system in Germany and the United States. After discussing the underlying concepts of science and technology policy and national innovation systems, we introduce the key science and research institutions of both countries. The German research system is shaped by a strong non-university research sector with close links to industrial research (e.g. the Fraunhofer society). The U.S. research institutions feature world-class universities and a large number offederal laboratories. While both countries display a comparable R&D intensity, the structure of R&D spending differs significantly. U.S. research concentrates on military research and specific civil missions like health research, whereas German research is more diffusion oriented. The German economy is focused on medium high-tech industries and realizes extremely high export shares. A major pillar of German competitiveness is the Mittelstand which excels at incremental innovations and features world market leaders in many small niches (Hidden Champions). The U.S. economic structure concentrates in knowledge-intensive services and high-tech industries such as IT Services and biotechnology. Further, its international competitiveness relies to a significant share on its vibrant start-ups and spin-offs. These firms have the potential for radical innovations opening up entirely new markets. An analysis of German and American innovation policies shows that these address the strengths and weaknesses of both innovation systems. For example, German policies put an emphasis on networking between research institutions and project-oriented financing as well as improvements of the education system, whereas U.S. policies feature a R&D tax deduction scheme and support for small firms and start-ups. All in all, the German and the U.S. innovation system display many complementarities. Nevertheless, the analysis of the countries' strengths permits the identification of best practices which may help to improve both countries' innovation systems. However, research and innovation policies always interact with the national innovation system. Therefore, not all policies which are successful in one country can easily be applied in the other. Finally, we identify common global challenges which imply common goals for Germany and the United States.