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Private R&D not necessarily drawn to areas with high public R&D

Press Release of November 15, 2016

Germany’s research and development concentrated in urban areas – public research undergoing dynamic development

According to a new study conducted by the German Institute for Economic Research (DIW Berlin), spatial proximity to industrial production plays a greater role for Germany’s private research and development (R&D) than does proximity to publicly funded research institutions and institutes of higher education (IHE).

“Policy should promote transregional networking among research facilities, higher education institutes, and businesses,” recommends DIW economist Alexander Eickelpasch. Areas with lower levels of industrial activity should thus not only promote the transfer of knowledge within the region but also take advantage of public research conducted elsewhere in order to support the local economy. Furthermore, to make better use of knowledge potential at the local level, regional industry should be strengthened – for example, within the framework of industrial development policy.

In 2013, nearly 589,000 employees worked in R&D, which represents an increase of 25 percent over 2003. This development has been driven primarily by research facilities and IHE, in which R&D personnel expanded by 33 percent and 29 percent, respectively, between 2003 and 2013. Meanwhile, the private R&D workforce grew by only 21 percent over the same period.

R&D personnel concentrated in Stuttgart, Munich, and Braunschweig

The vast majority of R&D personnel – 62 percent – is based in densely populated areas. When it comes to R&D intensity, which is the share of R&D workers in the total number of employees, the regions surrounding Stuttgart, Braunschweig (with Wolfsburg), and Munich have the highest levels, with Stuttgart and Braunschweig increasing their levels between 2003 and 2013. Other regions that grew during this period include Heilbronn and Ulm, while Munich, Berlin, Darmstadt, Aachen, and Karlsruhe all suffered loses. Regions that decreased their lag behind the national average include Frankfurt, Cologne, Freiburg, and Bielefeld, while Düsseldorf and Hannover lost their leads.

Public R&D: Munich and Berlin have the largest workforces; Göttingen, Dresden, and Aachen have the highest intensity

Germany’s personnel capacities in public R&D have grown more strongly than in private R&D, especially since the Federal Government began providing additional funds in 2005 under three government initiatives, namely the Pact for Research and Innovation, the German Universities Excellence Initiative, and the University Pact. Public R&D is more concentrated in urban areas than is private R&D: for example, 22 percent of research facility R&D staff and 14 percent of IHE staff are based in Munich and Berlin. Göttingen, Dresden, and Aachen have the highest levels of public R&D intensity – but only Dresden was able to increase its lead over the course of the observation period. ••

In addition to supporting the domestic economy, public R&D makes its surrounding areas attractive to foreign businesses and investors – that is, it is considered critical for regional development. The DIW study shows, however, that although there is a spatial connection between public and private R&D, it is weaker than the connection between private R&D and industrial activity.