COUNTRY SPECIALISATION REPORT
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1 COUNTRY SPECIALISATION REPORT Country: Germany Date: June 2006 ERAWATCH Network asbl: Project team: NIFU STEP, University of Sussex (SPRU), Joanneum Research, Logotech, FhG-ISI The opinions expressed in this publication are those of the individual authors alone and do not necessarily reflect the position of the European Commission. ERAWATCH is a registered Trade Mark. Reproduction of content is authorised provided the source is acknowledged. European Communities, Website:
2 Index COUNTRY SPECIALISATION REPORT - GERMANY...1 Main findings...1 Main R&D figures Total R&D expenditure...3 Public R&D statistics...4 GBAORD by socioeconomic objective...4 HERD by field of science...5 Business ENTERPRISE INTRAMURAL EXPENDITURE ON R&D (BERD)...6 Bibliometrics...9 Patents...11 Economic specialisation...12 Correlation analysis...15 Explanatory notes...19 ISIC v3 codes and sector description...19 How to read specialisation profile figures...20
3 Index of tables and figures Table 1. R&D expenditure by sector of performance and source of funds.germany and Million Euros. Current prices...3 Table 2. Correlation analysis. indexes BERD, Value added, Employment, Exports and patents. Germany. Averages and Table 3: Profile...18 Figure 1. R&D expenditure by performing sector as per cent of GDP (left axis). GDP in million Euros (right axis). Germany Figure 2. GERD by type of research. Germany...3 Figure 3. Government Budget Appropriations or Outlays for R&D (GBAORD) by socio-ecomomic objective. profile. Germany and Figure 4. Expenditure on R&D in the Higher Education Sector (HERD) by field of science. Germany. 1993, 1998 and Per cent of total HERD and in million Euros...5 Figure 5. Expenditure on R&D in the Government sector (GOVERD) by field of science. profile. Germany. 1993, 1998 and Figure 6. Business enterprise intramural expenditure on R&D by industrial sector. 31 sectors. profile. Germany. Averages and Figure 7. Shares of Business enterprise intramural expenditure on R&D (BERD) in the sector funded by government last available year in OECD statistics...7 Figure 8. Shares of total government funding of Business enterprise intramural expenditure on R&D (BERD) by industrial sectors last available year in OECD statistics...8 Figure 9. Number of publications by scientific field. 25 Scientific fields. profile. Germany. Averages and Figure 10. Shares of total publications by scientific field. 25 Scientific fields. Germany and Figure 11. Number of citations by scientific field. 25 scientific fields. profile. Germany. Averages and Five years citation window. (i.e. citations to papers published in the period and in the period Figure 12. Number of patents by industrial sector. 18 sectors in manufacturing. profile. Germany. Averages and Based on correspondence matrix ISI- SPRU-OST Figure 13. Shares of total patens by industrial sector. 18 sectors in manufacturing. Germany. Averages and Based on correspondence matrix ISI-SPRU-OST...11 Figure 14. Value added by industrial sector. 34 sectors. profile. Germany. Averages and Million Euros. Current prices....12
4 Figure 15. Shares of total value added by industrial sector. 34 sectors. Germany and Million Euros. Current prices...12 Figure 16. Employment by industrial sector. profile. Germany. 34 sectors. Averages and Numbers engaged hundreds Figure 17. Shares of total employment by industrial sector. 34 sectors. Germany and Numbers engaged hundreds Figure 18. Exports by industrial sector. profile. Germany. 34 sectors. Averages and Thousand USD. Current prices Figure 19. Shares of total exports by industrial sector. 34 sectors. Germany and Thousand USD. Current prices...14 Figure 20. BERD versus Value added specialisation in the primary and secondary industrial sectors. Germany. Based on average values Figure 21. BERD versus Value added n the services. indexes. Germany. Based on average values Figure 22. BERD versus patents. indexes. Germany. Based on average values Figure 23. BERD versus exports. indexes. Germany. Based on average values
5 COUNTRY SPECIALISATION REPORT - GERMANY MAIN FINDINGS The analysis shows that Germany exhibits a quite visible pattern of specialisation which is coherent across the various measures of specialisation and across R&D performing sectors. German manufacturing output has two notable specialisations: engineering products and chemicals. Business, government and higher education R&D specialisations reflect this particular strength, as do scientific specialisations and technological specialisations as reflected in patent specialisation. German aggregate R&D intensity has remained roughly stable for the past ten years. Financing sources have somewhat changed: business financing of BERD has slightly increased (from 87.6 to 91.7%), but the share of business financing of HERD has increased by more than 50%, from 8.4% to 12.8% (figure 1 and table 1). Priorities for GBAORD by socio-economic objective show a somewhat unique pattern for Germany among the larger EU economies. GUFS, non-oriented R&D, industry, environment and social issues are the major areas of strength. Although 55% of the government funding of BERD (figure 8) goes to Aerospace which is one of the main components of the defence industry, the allocation of resources to defence R&D (figure 3) is relatively lower than in the EU15. Furthermore, defence allocation is even less pronounced that it was ten years ago. The strong university funding is focused on three main scientific fields: medical science, natural sciences and engineering nearly 30% of HERD consists of R&D in Natural Sciences and 20% of R&D in engineering. This is echoed by GOVERD allocations, which are heavily focused on natural sciences and engineering (almost 80 percent of total R&D expenditure). German scientific specialisation fits with the value-added, exports, BERD and HERD specialisations: the three strongest areas are physics materials science and chemistry (figure 9 and 10). Turning to BERD, there are two strong German specialisations (figure 6): (NACE ), and Motor Vehicles (NACE 34). These are associated with slightly less strong specialisations in Fabricated Metal Products and Machinery. Government funding of BERD is present but very low across most industrial sectors amounting for 7% of total BERD (figure 7). Comparing patterns of business spending on R&D and government funding of business R&D some mismatching is apparent while a comparison between government funding of BERD and exports specialisation (figure 18) reveals more similarities. Over 55% of government funding of BERD goes to one activity, namely aerospace which is the only sector where export specialisation turns over from non-specialisation in 1993 to specialisation in There is a range of technological (patent) specialisations in motor vehicles, other transport equipment, industrial control equipment, electrical products and machinery of various types, machine tools, energy machinery and basic chemicals. But it should also be noted that patent growth in Germany during the 1990s was found across all major industrial categories. In terms of shares of German patents, there are five categories with more than 8% of German patents: motor vehicles, telecommunications, computers, pharmaceuticals and basic chemicals: so Germany has significant amounts of patenting even in areas in which it is not relatively specialized. 1
6 German value-added specialisation is distinct: strong specialisations in motor vehicles, instruments, electrical machinery, other machinery, fabricated metals, rubber and plastics and chemicals (bulk chemicals, specialty chemicals, plastics etc) (figure 14). These industrial specialisations correspond to the pattern of employment specialisation (figure 16). In addition, the strong value-added specialisations also correspond to export specialisations (although it should be noted that Germany has also had a major area of export growth during the decade , namely electronic equipment, where exports grew by nearly 90%) (figure 18). Comparing specialisation of business spending 1 on R&D with technological and economic specialisation, significant similarities in patterns are revealed. Correlation analysis (table 2) shows a strong correlation between BERD in and value added and exports in the same period while the correlation is extended to patents, value added and exports in the period Similarly BERD specialisation in is strongly correlated with patent, value added and export specialisation in the same period. This is also found in patenting: technological specialisations are in accordance with both industrial and R&D specialisation. Looking for similarities in sectoral specialisation figures 20 to 23 shows that the industrial strength and the competitive position of Germany in the sectors of motor vehicles, machinery, instruments, plastics, fabrication of metals and chemicals is accompanied by technological specialisation and specialisation in BERD. 1 The industrial strength is represented by the specialization in value added while the competitive position by the specialisation in exports 2
7 MAIN R&D FIGURES TOTAL R&D EXPENDITURE Figure 1. R&D expenditure by performing sector as per cent of GDP (left axis). GDP in million Euros (right axis). Germany BERD GERD HERD GDP Euro 0 Source: OECD OFFBERD 2005 Table 1. R&D expenditure by sector of performance and source of funds.germany and Million Euros. Current prices. Performing vs Financing Sectors - million Euros GOVERD BERD HERD Total Business Government Non profit From Abroad Total Pre-EMU euro and EURO Source: OECD OFFBERD 2005 Figure 2. GERD by type of research. Germany No data available Source: OECD OFFBERD
8 PUBLIC R&D STATISTICS GBAORD by socioeconomic objective Figure 3. Government Budget Appropriations or Outlays for R&D (GBAORD) by socio-ecomomic objective. profile. Germany and Human health (4.3% + ) Social issues (5.0% +) Non-oriented research (16.3% +) Energy (3.0% -) Other civil research (0.6%+) Land use (1.8%+) Industry (12.4%) GUF's (38.9% +) Space (5.0% -) Earth (1.7% -) Defence (6.5% -) Environment (3.3% -) Agriculture (2.0% -) Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: OECD Basic Science and Technology Statistics 2005, own calculations. 4
9 HERD by field of science Figure 4. Expenditure on R&D in the Higher Education Sector (HERD) by field of science. Germany. 1993, 1998 and Per cent of total HERD and in million Euros. 100% 90% 80% 70% 60% % 40% % 20% 10% % Natural sciences Engineering Medical sciences Agricultural sciences Social sciences Humanities Source: OECD Basic Science and Technology Statistics Figure 5. Expenditure on R&D in the Government sector (GOVERD) by field of science. profile. Germany. 1993, 1998 and % 80% % % 20% % Natural sciences Engineering Medical sciences Agricultural sciences Social sciences Humanities Source: OECD Basic Science and Technology Statistics
10 BUSINESS ENTERPRISE INTRAMURAL EXPENDITURE ON R&D (BERD) Figure 6. Business enterprise intramural expenditure on R&D by industrial sector. 31 sectors. profile. Germany. Averages and in BERD - Germany Other Business act Electrical machinery Ships Pharmac R & D Wood & Publishing Furniture & rec Aeros pace Electro. equip. Basic metals Motor vehicles Machinery nec Community serv. IT services Financial. Interm Transport Trade Construction Water & electr. Non-metallic min Mining Agriculture Transport nec Instruments Office machin. Fabricated metals Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: OECD Basic Science and Technology Statistics , ANBERD 2005, own calculations The changes from positive to negative specialisation in the sectors electronic equipments (NACE 32) and Electrical Machinery (NACE 31) are noteworthy and have to be studied more carefully. 6
11 Figure 7. Shares of Business enterprise intramural expenditure on R&D (BERD) in the sector funded by government last available year in OECD statistics. Aerospace Business act & real Estate R & D Ships Water &electr. Basic metals Wood & publishing Construction Instruments Fabricated metals Agriculture Non-metallic min Electro. equip. Machinery nec Mining Computer act Transport Electrical machinery Furniture & rec Pharmac Other transport nec Office machin. Motor vehicles Trade Financ. Intermediation 11.0% 9.9% 8.5% 8.2% 6.7% 6.3% 5.2% 5.1% 5.0% 4.2% 4.1% 3.9% 3.6% 3.6% 3.3% 2.9% 2.7% 2.3% 1.4% 1.4% 1.4% 1.1% 0.7% 0.4% 0.0% 23.2% 22.6% 19.9% 31.6% 62.9% 0% 10% 20% 30% 40% 50% 60% 70% Source:OECD Basic Science and Technology Statistics 2005, own calculations 7
12 Figure 8. Shares of total government funding of Business enterprise intramural expenditure on R&D (BERD) by industrial sectors last available year in OECD statistics. Aerospace R & D Electronic equip. Business act & Real Machinery nec Instruments Motor vehicles Fabricated metals Pharmaceuticals IT services Electrical mach. Basic metals Non-metal minerals Transport and Telecoms Water & electr. Wood & Publishing Office machin. Ships Construction Transport nec Agriculture Furniture Recycling Trade Financ. intermediation Hotels 7.83% 5.61% 5.52% 4.86% 4.39% 2.76% 1.64% 1.52% 1.28% 1.26% 1.16% 1.12% 1.08% 1.00% 0.54% 0.47% 0.46% 0.44% 0.44% 0.34% 0.32% 0.28% 0.16% 0.16% 0.12% 0.08% 0.04% 0.02% 0.00% 0.00% 55.01% 0% 10% 20% 30% 40% 50% 60% Source: OECD Basic Science and Technology Statistics 2005, own calculations 8
13 BIBLIOMETRICS Figure 9. Number of publications by scientific field. 25 Scientific fields. profile. Germany. Averages and Social Sciences Pharmacology Plant & Animal S Multdisciplinary Law Immunology Mathematics Microbiology Environment Engineering Education Agricultural Sc Clinical Medicine Biology & Biochemistry Psychology Physics Neurosciences Mol Biology & Genetics Geosciences Economics Computer Science Space Sc Materials Sc Chemistry Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: Thomson ISI, NSIODE 2005, own calculations. Figure 10. Shares of total publications by scientific field. 25 Scientific fields. Germany and % 20 % 15 % 10 % 5 % 0 % Agricultural Sc Space Sc Biology & Biochemistry Chemistry Clinical Medicine Computer Science Economics Education Engineering Environment Geosciences Immunology Law Molecular Biology & Microbiology Materials Science Mathematics Neurosciences Multdisciplinary Physics Plant & Animal S Pharmacology Psychology Social Sciences Share 1993 Share 2003 Source: Thomson ISI, NSIODE
14 Figure 11. Number of citations by scientific field. 25 scientific fields. profile. Germany. Averages and Five years citation window. (i.e. citations to papers published in the period and in the period Citations - Germany Law Psychology Clinical Medicine Environment Agricultural Sc Plant & Animals Physics Neurosciences Immunology Mathematics Microbiology Engineering Biology & Biochemistry Social Sciences Pharmacology Multdisciplinary Geosciences Materials Science Molecular Biology & Genetics Education Economics Computer Science Space Sc Chemistry Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: Thomson ISI, NSIODE 2005, own calculations. 10
15 PATENTS Figure 12. Number of patents by industrial sector. 18 sectors in manufacturing. profile. Germany. Averages and Based on correspondence matrix ISI- SPRU-OST. Furniture Motor vehicles Instruments Electro. Equip Office machin. Fabricated metals Non-metal mineral Pharma Transport nec Electrical machinery Machinery Basic metals Wood & Publishing Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: European Patent Office 2005, own calculations. Figure 13. Shares of total patens by industrial sector. 18 sectors in manufacturing. Germany. Averages and Based on correspondence matrix ISI-SPRU-OST. 16 % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 % Publishing Pharmac Non-metal mineral Basic metals Fabricated metals Machinery Office machin. Electrical machinery Electro. Equip Instruments Motor vehicles Other Transport Furniture Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: European Patent Office 2005, own calculations. 11
16 ECONOMIC SPECIALISATION Figure 14. Value added by industrial sector. 34 sectors. profile. Germany. Averages and Million Euros. Current prices. Hotels R&D Financ. interm Ships Transport Trade Cons truction Gas& water Furniture & rec Transport nec Air Electr. Equip Pharm Community services. IT Basic - met Telecom Other Business act Non-met Printing Electrical m ach. Office mach Machinery Fabricated met Mining Agriculture Real estate Ins trum ents Vehicles Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: OECD, STAN 2005, own calculations. Figure 15. Shares of total value added by industrial sector. 34 sectors. Germany and Million Euros. Current prices. 25 % 20 % 15 % 10 % 5 % 0 % Agriculture Mining Printing Pharm Non-met Basic - met Fabricated met Machinery Office mach Electrical mach. Electr. Equip Instruments Vehicles Ships Air Transport nec Furniture & rec Gas& water Construction Trade Hotels Transport Telecom Financ. interm Real estate IT R&D Other Business act Community services. Source: OECD, STAN,
17 Figure 16. Employment by industrial sector. profile. Germany. 34 sectors. Averages and Numbers engaged hundreds. Other Business act Real es tate IT Telecom Transport Hotels Trade Cons truction Furniture & rec Transport nec Air Ships Electr. Equip Non-met Pharm Printing Community services. R&D Financ. interm Gas& water Agriculture Vehicles Ins trum ents Electrical m ach. Office mach Machinery Fabricated met Basic - met Mining Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: OECD, STAN, 2005, own calculations. Figure 17. Shares of total employment by industrial sector. 34 sectors. Germany and Numbers engaged hundreds. 30 % 25 % 20 % 15 % 10 % 5 % 0 % Agriculture Mining Printing Pharm Non-met Basic - met Fabricated Machinery Office mach Electrical Electr. Instruments Vehicles Ships Air Transport Furniture & Gas& water Construction Trade Hotels Transport Telecom Financ. Real estate IT R&D Other Community Source: OECD, STAN,
18 Figure 18. Exports by industrial sector. profile. Germany. 34 sectors. Averages and Thousand USD. Current prices. Furniture Other transport nec Aeros pace Ships Motor vehicles Ins trum ents Electro. Equip Electrical m achin Office machin. Fabricated metals Basic metals Machinery nec Non-metallic min Pharmaceuticals Printing & publ Mining Agriculture Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: UNIDO INDSTAT4 2005, ISIC Rev3 and COMTRADE, 2005, own calculations. Figure 19. Shares of total exports by industrial sector. 34 sectors. Germany and Thousand USD. Current prices. 25 % 20 % 15 % 10 % 5 % 0 % Agriculture Mining Printing & publ Pharmaceuticals Non-metallic min Basic metals Fabricated metals Machinery nec Office machin. Electrical machin Electro. Equip Instruments Motor vehicles Ships Aerospace Other transport nec Furniture Source: UNIDO INDSTAT4 2005, ISIC Rev3 and COMTRADE, 2005, own calculations. 14
19 CORRELATION ANALYSIS Table 2. Correlation analysis. indexes BERD, Value added, Employment, Exports and patents. Germany. Averages and DE_BERD 9395 DE_BERD9395 Pearson Correlation 1 Sig. (2-tailed). DE_BERD 0103 DE_PAT 9395 DE_PAT 0103 DE_VA 9395 DE_VA 0103 DE_EMP 9395 DE_EMP 0103 DE_EXP 9395 DE_EXP 0103 DE_BERD0103 Pearson Correlation.773(**) 1 Sig. (2-tailed).000. DE_PAT9395 Pearson Correlation Sig. (2-tailed) DE_PAT0103 Pearson Correlation.529(*).493(*).961(**) 1 Sig. (2-tailed) DE_VA9395 Pearson Correlation.505(**).520(**) * 1 Sig. (2-tailed) DE_VA0103 Pearson Correlation.413(*).559(**).550*.658(*).839(**) 1 Sig. (2-tailed) DE_EMP9395 Pearson Correlation (**).395(*) 1 Sig. (2-tailed) DE_EMP0103 Pearson Correlation (**).421(*).946(**) 1 Sig. (2-tailed) DE_EXP9395 Pearson Correlation.608(**).701(**).555*.657**.782(**).811(**) Sig. (2-tailed) DE_EXP0103 Pearson Correlation.605(**).683(**).639(**).750(**).747(**).847(**) (**) 1 Sig. (2-tailed) ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed). 15
20 Figure 20. BERD versus Value added specialisation in the primary and secondary industrial sectors. Germany. Based on average values VA BERD Electrical mach Office mach Electronic eqm Motor Vehic Machinery nec Instruments Basic metals Aerospace Fabr metals Publishing Other transp 0 50 Furniture Non metal minerals 100 Pharma Mining Agriculture Ships -100 Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: Own calculations Figure 21. BERD versus Value added n the services. indexes. Germany. Based on average values VA Community ser Other business act BERD 0 Electricity Computer act -100 Trade Research Financial int Construction Hotels -100 Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: Own calculations 16
21 Figure 22. BERD versus patents. indexes. Germany. Based on average values Patents Machinery nec Motor vehicles Electrical mach Basic metals Fabricated met BERD 0 Electro eqm -100 Office mach Instruments Pharmac Publishing Non met minerals -100 Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: Own calculations Figure 23. BERD versus exports. indexes. Germany. Based on average values Exports Machinery nec Motor vehicles Electric mach Instruments Aerospace Fabricated metals BERD Basic metals 0 Ships Other transport Electronic eqm Publishing Non metal min Office mach Pharmaceuticals Agriculture Mining -100 Notes: index with EU15 as reference. Max specialisation: Min. specialisation: Source: Own calculations 17
22 Table 3: Profile Areas of specialisation BERD Increase Fast growing sectors >4.9% Stable Losing Increase ; 28;33; 34 Red numbers: Decrease specialisation from specialised to non specialised Blue numbers: Increase specialisation from non specialised to specialised Medium-Low growth sectors =<4.9% Stable Losing Increase 24ex2423; 26 29; 30 31; Declining sectors <0 Stable Patents 23 31;34 25;27;28;29 24ex2423; Value Added Employment Exports ; ;27;29;33; ; ;28;32; ex2423;28 30; ex2423;25 27;28;29; ; 30;32; 33 29;33;351 24ex2423; Losing 18
23 EXPLANATORY NOTES ISIC v3 codes and sector description Agriculture Mining Wood & Publishing excluding pharmaceuticals 24ex2423 Pharmaceuticals Non-metal minerals 26 Basic metals 27 Fabricated metals 28 Machinery nec 29 Office machinery 30 Electrical mach. 31 Electronic equip. 32 Instruments 33 Motor vehicles 34 Ships 351 Air 353 Transport nec Furniture & recycling Water & electr Construction 45 Trade Hotels 55 Transport Telecoms 64 Financial intermediation IT services 72 R & D 73 Other Business activities 74 Community services
24 How to read specialisation profile figures Plotting specialisation indexes against each other is a method for visualising differences in specialisation patterns. The most interesting analytical dimension in this report is comparing business enterprise intramural R&D expenditure specialisation patterns with specialisation patterns in value added, employment, exports and technological specialisation (patents). The result of the plots is four distinct specialisation quadrants showing: 1. Sectors with neither specialisation in BERD nor in the other analytical dimension (lower left quadrant) 2. Sectors with a specialisation in BERD and in the other analytical dimension (upper right quadrant) 3. Sectors with a specialisation in BERD but none in the other analytical dimension (lower right quadrant) 4. Sectors that display a specialisation in the other analytical dimension but not in BERD (upper left quadrant) If there is a good match between BERD and, say, value added specialisation patterns we expect to find all sectors either in the lower left or in the upper right quadrant. Sectors in the upper left or in the lower right of the graphs indicate anomalies, that is, specialisation in one dimension and non-specialisation in the other. If there are many sectors in these quadrants the graph indicates lack of correlation between BERD and, say, economic specialisation. BERD and Value Added specialisation an example Sectors with a specialisation in VA but not in BERD Value Added 100 Sectors with both BERD and VA specialisation 50 Vulnerable competitive position? Strengthening the strengths? BERD Sectors with no specialisation in BERD and VA -50 Sectors with a specialisation in BERD but not in VA Neglected sectors? Further decline in the future? Efforts concentrated in niches? Opportunities for catching up?
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