FACTS & FIGURES

Economic Overview
Germany
Market, Productivity, Innovation

ISSUE 2021/2022

ECONOMIC OVERVIEW GERMANY: KEY DATA

Germany in Numbers
Foreign Tradein EUR billion
2018

Number of companies:
3.5 million – 99.5% SMEs

Population:
83.2 million people

2019

2020

Exports

1,317

+3.0%

1,328

+0.8%

1,205

-9.3%

Imports

1,089

+5.6%

1,104

+1.4%

1,025

-7.1%

Balance

229

224

180

Export goods* (2020):
Chemicals 14.7%, Automotive 10.0%, Machinery 9.1%, Electronics 8.8%,
Food 6.8%, Electrical Engineering 6.7%, Textiles 5.1%, Other Sectors 38.8%
Import goods* (2020):
Chemicals 17.0%, Machinery 15.9%, Automotive 14.7%, Electrical Engineering
7.3%, Electronics 5.2%, Food 5.0%, Other Sectors 34.9%

Total turnover of all companies(2018): EUR 6.97 trillion –34.4% SME turnover*top ten product groups

Germany's EU Trade Relations
in EUR billion

Area: 357,581 sq. km

2018

2019

2020

Exports

686

+6.3%

699

+1.8%

661

-5.3%

Imports

696

+5.2%

695

-0.2%

637

-8.4%

Balance

-10

4

25

GDP Formation 2020

Economic Development
2018

2019

2020

GDP (nominal in EUR billion)

3,356

3,449

3,332

Per capita GDP (in EUR)

40,48541,50840,072

Inflation rate

1.9%

1.4%

0.4%

Unemployment rate

5.2%

5.0%

5.9%

Construction 6%

Agriculture 1%

Industry 23%

GDP Growth
real annual change in percent

-4.9%

2020
2021

3.5%

2022

3.6%

Sources: Federal Statistical Office, IFM Bonn, Federal Employment Agency, Federal Ministry for Economic Affairs and Energy, Germany Trade & Invest 2021

ECONOMIC OVERVIEW GERMANY 2021 | gtai.com

Services 70%

ECONOMIC OVERVIEW GERMANY: FOREIGN DIRECT INVESTMENT

International Business Location
Global FDI Magnet
According to the United Nations Conference on Trade andDevelopment (UNCTAD), Germany ranks among the world’s
leading countries for foreign direct investment (FDI) with
USD 1,059 billion in inward stock in 2020. According to official
Bundesbank (German Central Bank) statistics for the same
year, some 59 percent of all FDI stocks in Germany originate
from within the EU, with a further nine percent derived fromthe remaining European non-EU countries. Investments fromoutside the EU continue to grow. North America accounts for
19 percent of FDI stock, while Asia holds a 12 percent share.
First Choice Business Location
According to a survey of 550 decision makers conducted
as part of the EY European Attractiveness Survey 2021,
Germany was the highest ranking country of all EU member
states with “the most credible and investment-friendly
COVID-19 recovery plans.”
Ernst & Young’s “European Attractiveness Survey 2019”confirms Germany’s reputation as one of the most attractive
business locations in the world. International decision makers
ranked Germany first within the EU. Sixty-nine percent of
more than 500 international managers surveyed named Germany as the most attractive country within their personal
top three ranking, making Germany Europe’s top FDI country.
This is an increase of three percent from 2018. Germany
provides a home to three of the top six most attractive
European cities in Berlin, Frankfurt and Munich. Similar
results were presented by Kearney’s FDI Confidence Index
2021, which also confirms Germany's reputation as the most
attractive business location in Europe and third worldwide.
The AmCham Business Barometer 2021 highlights the positive
regard in which US companies active in Germany hold thecountry. Asked about their opinion of the German businessenvironment, 63 percent of US company respondents rated
Germany as being a “good” or “very good” business location.
Seventy-four percent of respondents are convinced that
Germany will either improve or maintain its competitiveedge in the future. The Ernst & Young Attractiveness Survey
2019 for the business location Germany also highlighted various business location factors including telecommunications
and transport, workforce qualification, and stability of thelegal and political framework as well as the attractiveness ofthe domestic market. Forty-three percent of those surveyed
predict that Germany’s attractiveness will continue to growin the coming years.

Free and Open Markets
Germany has a welcoming attitude towards foreign direct
investment. The German market is open for investment inpractically all industry sectors, and business activities arefree from regulations restricting day-to-day business. German law makes no distinction between Germans and foreign
nationals regarding investments or the establishment ofcompanies. The legal framework for FDI in Germany favors
the principle of freedom of foreign trade and payment. There
are no restrictions or barriers to capital transactions or currency transfers, real estate purchases, repatriation of profits,
or access to foreign exchanges.
Supporting Investment Projects
Incentives in Germany are designed to meet the immediate
capital needs of investors. Early stage investment financing
provides funding at the beginning of the new investment
project. These incentives, mostly provided as cash grants, areimportant as they guarantee liquidity at a stage in the investment process when investor capital requirements are typically high. Later stage investment incentives are madeavailable in the form of a raft of programs created to support
putting together a workforce in Germany (e.g. through wage
subsidies) and provide generous R&D project assistance.
Incentives in Germany are available to all investors – regardless of investor country of provenance. Funding to the tune ofmore than EUR 19 billion has been freed up by the EU (cofinanced using means obtained from German federal andfederal state budgets) for the period 2014 to 2020. As well as
this, Germany and its individual federal states also make theirown incentives funds available to prospective investors.

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Please visit our website for more incentives
information: www.gtai.com/incentives

AmCham Business Barometer 2021
American business executives highlighted a number of factors as being
location advantages that distinguish Germany from its competitors.

Skilled workers
Supplier networks
Research and development

Infrastructure
Predictability of investment conditions
Source: American Chamber of Commerce Germany,
Roland Berger Strategy Consultants 2021

ECONOMIC OVERVIEW GERMANY 2021 | gtai.com

ECONOMIC OVERVIEW GERMANY: FOREIGN DIRECT INVESTMENT

Foreign Direct Investment Projects
Every year more and more companies discover Germany
as a secure and rewarding investment location. More than80,000 foreign companies are already operating in Germany,
providing employment to over three and a half million
people – proof positive of Germany’s attractiveness as aninternational business location.
Between 2015 and 2020, fDi Markets – the fdi database of
the Financial Times – recorded a total of 7,242 investment
projects from more than 5,600 foreign companies. In 2020,
more than 1,000 projects were recorded – one of the best
results achieved to date. Germany ranks third internationallyin terms of FDI projects attracted.
The most important countries as sources for new investment
projects are the USA (19 percent of all investment projects),
Switzerland (11 percent), and the UK (nine percent) respectively. In 2009, China emerged as a major source of investments, rising to become the most important Asian source
country for greenfield FDI projects in Germany. The high levelof Chinese investment has subsequently been maintained,making Germany Europe’s number one location for Chinese
greenfield investments.
Diverse Industry Opportunities
According to fDi markets, foreign companies invested in 37
different sectors – underlining the highly diversified natureof Germany’s economy. Most new investment projects wererealized in the ICT & software industry (21 percent of new
projects), with business and financial services (15 percent)close behind. Most new projects open sales and marketing& support offices. Approximately 1,000 investment projects
were either R&D or manufacturing-site located. The Ernst& Young Attractiveness Survey 2019 further points to thediverse investment opportunities in Germany. The growth
drivers are in the transportation & automotive industries,
digital industries (information & communications technology), environmental technologies, and energy/utilities as well
as pharmaceuticals and biotechnology. Managers surveyed
expect future investment activities to extend beyond sales
and marketing operations to include R&D and manufacturing.

→

Germany Trade & Invest's industry experts can help
realize your investment project in Germany. Pleasecontact invest@gtai.com for more information.

FDI Projects by Sector 2015-2020

Other Sectors 16%
ICT & Software 21%

Energy, Minerals,
Metals 3%
Automobile 4%
Healthcare, Pharma,
Biotechnology 5%
Transportation,
Storage & Logistics 5%

Business &Financial
Services 15%

Electronics &Semiconductors 5%
Consumer Goods(incl. Food &Beverages) 10%

Industrial
Machinery &Equipment 10%

Chemicals,
Plastics, Paper 6%

Source: fDi Markets 2021

FDI Projects by Business Activity 2015-2020

41%

Sales, Marketing & Support

Business Services

18%

Manufacturing & R&D

13%

Retail12%

Logistics, Distribution &Transportation
Headquarters

Other Activities

6%
4%

6%

Source: fDi Markets 2021

ECONOMIC OVERVIEW GERMANY 2021 | gtai.com

ECONOMIC OVERVIEW GERMANY: MARKET

Europe’s Economic Hubworldwide. Sixty-eight percent of all exports are exported
to European countries, of which 52 percent go to EU member
states. In 2020, Asia was the number two region for German
exports; receiving approximately 17 percent of all goods from
Germany, followed by the Americas on 12 percent.

Europe’s Largest Market
Germany is the largest economy in Europe. It constitutes 25
percent of European GDP, and is home to 19 percent of theEuropean Union’s (EU) population. The German economy
is both highly industrialized and diversified, with an equal
focus on services and production.

Manufacturing Location Germany
German companies represent ten percent of European
manufacturing companies and generate almost 31 percent of
total EU turnover in the sector. More international companies
are placing their faith in Germany as a vital production site
location and benefiting from the country’s excellent businessframework and superior productivity rates.

Coronavirus Pandemic and the Economy
Germany’s economy has been seriously affected by the
global coronavirus pandemic. However, Germany’s economic
downturn in 2020 was less severe than previously expected.
According to data from the Federal Ministry for Economic
Affairs and Energy, Germany’s GDP fell by 4.9 percent in2020. Earlier forecasts predicted a GDP slump of at least 6.3
percent. The ministry predicts GDP to grow by 3.5 percent
this year. According to the European Commission, large
catch-up and carry-over effects in 2021 and 2022 should
buoy the German economy, allowing Germany to reach its
pre-crisis level in 2022.
Global Export Player
Germany’s products continue to be export hits worldwide.
In 2020, German export levels reached EUR 1.2 trillion, with
imports of EUR 1 trillion during the same period. Germanproduced goods from the chemical, automotive, and machinery & equipment industries are in particularly high demand

SMEs: Germany’s Economic Backbone
Exports are driven by Germany’s backbone of highly innovative small and medium-sized enterprises (SMEs), the county’s
globally renowned Mittelstand. They constitute 99.5 percent
of all companies, employing around 60 percent of the German workforce. Many of these SMEs are “hidden champions”– world market leaders in their respective niche segments.
Together with internationally leading large companies –including Bayer, BASF, Daimler, Volkswagen, and Siemens –they make up Germany’s manufacturing industrial base.

Share of Total GDP and Population in the European Union 2020
GDP
(in EUR billion)

Share of Total GDP(EU-27)

Population(in million)

Share of Total
Population(EU-27)

Germany

3,332

25%

83.2

19%

France

2,279

17%

67.3

15%

Italy

1,652

12%

59.6

13%

Spain

1,122

8%

47.3

11%

Netherlands

799

6%

17.4

4%

Poland

523

4%

38.0

8%

Czechia

214

2%

10.7

2%

EU-27

13,306447.3

USA17,059

328.2

China

11,9981,397.7

Japan

4,114

126.3

United Kingdom

2,209

66.8

Note: Currencies converted with the European Central Bank‘s reference exchange rates for 2020
Source: Eurostat, IMF, World Bank 2021

ECONOMIC OVERVIEW GERMANY 2021 | gtai.com

ECONOMIC OVERVIEW GERMANY: MARKET

Infrastructure Excellence
Europe’s Global Logistics Hub
Germany has become Europe’s prime logistics hub, thanks inpart to its central geographical location, but most of all due
to factors of quality and reliability. With state-of-the-art
transportation networks (road, rail, sea, and inland waterways) as well as a dense network of national and international airports, Germany provides easy access to domestic
and international markets.

"Investing in Germany brings the immense
German quality trademark for our customers
and the ability to grow our business using
the excellent infrastructure, locational
advantage, value-for-money labor, andfavorable economic conditions.”
Dr. Sankar Das Gupta, CEO and Co-Founder,
Electrovaya Inc.

World Class Transport Infrastructure
Germany’s infrastructure excellence is confirmed by a numberof recent studies including the World Economic Forum’s (WEF)
Global Competitiveness Report and various investor surveys
conducted by institutions including the World Bank and Ernst& Young. The 2018 Logistics Performance Index of the WorldBank ranked Germany first worldwide for its logistic proficiency; singling out Germany’s quality of trade and transport
infrastructure. Accumulated in this score for Germany are highmarks for the quality of roads and air transport, excellent
railroads and port infrastructure as well as information infrastructure. Further indicators where Germany secured the top
slot were “logistics competence” and “timeliness.”
World Class Network Infrastructure
Among the highlights of the country’s network infrastructure
are Europe’s second-largest port measured in container port
traffic (Hamburg), Europe’s largest port container terminal(Bremerhaven) and over 250 inland ports. Germany has adense network of airports including 21 international airports.
Of these, Frankfurt is Europe’s fourth-largest airport in termsof cargo and the sixth-largest airport in terms of passenger
volume. The country’s highway system has one of the highest
highway kilometer density levels in Europe – its approximately 38,500 km of railway track being almost enough tocircle the globe.

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Quality of Infrastructure 2018
Rank

Country1

Germany

2

Sweden3

Belgium

4

Austria

5

Japan

6

Netherlands

7

Singapore

8

Denmark

9

United Kingdom

10

Finland

Source: World Bank Logistics Performance Index 2018

Bringing East and West Together
Germany’s seaports in the north are an important conduit
for trade with the UK, Scandinavia, and the Baltic states. In
the west, an extensive network of roads, rail links and inland
waterways feeds into France and the Benelux countries. To
the south, Germany has strong commercial ties with Switzerland and Austria and road, rail and water links with the Balkan
states. Turning eastwards, Germany’s borders with Poland andCzechia open up roads to the more distant and expanding
European and Asian markets.
Security of Electricity and Gas Supply
Security of supply of electricity and gas is very high – almost
100 percent according to the Federal Ministry for Economic
Affairs and Energy monitoring report on security of electricity
supply. Germany has the most reliable power grids in Europe,with customers contending with power failure rates of only
13 minutes per year. At two million kilometers in length, theelectricity network is tightly interconnected – making it lesssusceptible to interference than the networks of comparable
industrialized nations. The integration of fluctuating renewable energies into the electricity grid demands innovative
storage solutions and major investment in the transmission
grid. The increased feed-in of wind and solar energy as partof Germany’s “Energy Transition” will affect the stability of
power supply. This requires the construction of smart grid
infrastructure that ensures uniform utilization. Smart energy
grids will play a pivotal role in maintaining power stability inthe years ahead as renewable energy sources are integrated
into the power mix.

ECONOMIC OVERVIEW GERMANY: PRODUCTIVITY

Increasing CompetitivenessHigh Productivity
In terms of nominal unit labor costs, Germany has gainedin productivity over the past decade. While some European
countries, especially in Eastern Europe, are showing a substantial increase in nominal unit labor costs, Germany hasregistered a moderate growth of around just two percent.
As a result, Germany has become more competitive – particularly in manufacturing.

“Due to the highly qualified workers andefficient cost structures, on top of Germany's
leading position in the field of automotive
expertise, Germany was the clear choice forour new production, European headquarter
and R&D activities.”
Yoshihiro Nakata, Managing Director,
Sunstar Engineering Europe GmbH

Growth of Labor Costs in Manufacturing 2016-2020
annual average growth

Spain

1.4%

France1.9%

Netherlands

2.0%

Germany

2.2%

UK

2.3%

EU-27

2.3%
4.2%

Czechia

4.7%

Poland4.9%

Slovak Republic

5.2%

Hungary
Source: Eurostat 2021

Stable Labor Costs
The labor cost difference between Germany and its neighbors in Eastern Europe has been reduced significantly. Since
2016, labor costs in manufacturing have been rising in the
EU-27 member states at an annual rate of 2.6 percent. Whilelabor costs in some EU countries – and particularly those inEastern Europe – have been growing at an annual rate ofmore than five percent, labor costs in Germany have been
increasing at a rate of just 2.2 percent.
Highly Automated Manufacturing
Production in German manufacturing is highly automated.
According to the International Federation of Robotics, 346
industrial robots per 10,000 employees have been in operation in 2019. In absolute terms, 20,500 industrial robots were
deployed in that year alone. Today, Germany is the European
leader in industrial automation. Clients in the automotive
and electronics industries are the primary beneficiaries ofindustrial robot installation.
Motivated and Dependable Employees
Higher than average employee motivation scores – exceeding those of most industrialized countries – provide clear
evidence for the exceptional quality of the German workforce. According to the IMD World Competitiveness Yearbook
2020, figures for Germany are much better than numbers for
Canada and the US, the UK, France and Poland, or China andRussia. These scores in employee motivation also add to thefact that employees in Germany lose fewer working days
due to industrial action than employees elsewhere.

ECONOMIC OVERVIEW GERMANY 2021 | gtai.com

Density of Industrial Robots* in Manufacturing 2019

346

Germany
Sweden277
243

Denmark
Italy

212

Belgium/
Luxembourg

211

Netherlands

194

Spain

191

Austria

189

France177

Slovak Republic169

Note: *Robots installed per 10,000 employees
Source: IFR 2020

ECONOMIC OVERVIEW GERMANY: PRODUCTIVITY

Excellence in Professional Education
Highly Skilled Workforce
Germany’s well-educated and trained workforce is key to thecountry’s high level of productivity. Its workforce includes a
population of more than 43 million – making it the largest
pool of skilled labor in the EU. The majority of the German
workforce has completed an upper secondary or post-secondary education program – in addition to the high numberof people that have completed a tertiary program. Morethan 86 percent of the German workforce have received atleast an upper secondary education.

Germany‘s Dual Vocational Education and Training(VET) System

TRAINEESDUAL VET PROGRAMMES: 2 – 3.5 YEARS
IN-COMPANY TRAINING (70% OF VET)

Dual Education System
In Germany, a dual system of vocational education andtraining – combining the benefits of theoretical and practical learning – has evolved. The German government, theGerman Chamber of Industry and Commerce (DIHK) and theGerman Confederation of Skilled Crafts (ZDH) ensure thatstrict standards of professional development are maintained.
This helps ensure that a high quality of skilled labor is available across Germany. Close cooperation between the public
and the private sector ensures the efficiency of the dual
system. Almost 20 percent of German companies participate
in the scheme. More than 70 percent of trainees continue
their professional career in the company where they received
their vocational training. A system that is responsible forthe lowest youth unemployment rate in Europe (the current
number of trainees exceeds 1.3 million) enjoys an unparalleled reputation – both in Germany and abroad.
Engineering Excellence
According to the German Federal Statistical Office, Germany
has an exceptionally high number of first-year students.
In the academic year 2019/20, around 420,000 first-year
students – at more than 425 universities – embarked ona course of academic study. More than 37 percent of thestudents opted for programs in the natural sciences, mathematics and statistics, information and communication
technologies, engineering, manufacturing, and construction.
That share is the highest in Europe. Within the EU, Germany
also boasts the highest number of new doctorates in thenatural sciences and ranks third internationally.
Continuing Vocational Training
In Germany, the readiness to engage in continuing vocational
training is above average. 56 percent of all adults in employment participate in relevant activities. The OECD average is
53 percent, only. The level of participation is also above average for employees from smaller companies. Skills, thus, arealways up-to-date in Germany.

· Legal Basis: Training contract· Company pays trainee a "Training allowance“· Company provides systematic training underreal-life working conditions (in-company
trainer, up-to-date equipment etc.)

VOCATIONAL SCHOOL EDUCATION (30% OF VET)
· Legal Basis: Compulsory education law· Local government finances public vocational
schools (facilities, teachers etc.)· Vocational schools offer lessons in vocational(2/3) and general (1/3) education

SKILLED EMPLOYEES

Source: Germany Trade & Invest, BiBB 2019

Workforce by Level of Professional Education 2019
percent of total workforce

Unskilled 17%

Vocational College
Graduates 10%

University
Graduates 22%
Source: Federal Statistical Office 2020

ECONOMIC OVERVIEW GERMANY 2021 | gtai.com

Dual Education
Apprentices 50%

ECONOMIC OVERVIEW GERMANY: INNOVATIONHigh Innovation Rate

Innovative Cluster Environment
Companies and research institutions benefit from thestrengths and competencies of regional R&D clusters
throughout Germany. The "go-cluster" excellence program by
the German Federal Ministry for Economic Affairs and Energy
provides financial stimuli to improve the management ofregional R&D clusters (www.clusterplattform.de).

12.3%

Research-intensive industries (total)
High-tech industries
9.8%

Cutting-edge technologies

High-Tech Products “Made in Germany”
German companies are in the top tier of global leaders in thedevelopment of new technologies. The digitalization is accelerating in the continued growth of German industry andtrade. In 2019, Germany exported high-tech goods to thevalue of EUR 186,3 billion – making the country the top hightech goods exporter in Europe and second worldwide.

ECONOMIC OVERVIEW GERMANY 2021 | gtai.com

2.2%

1.4%

1.9%

3.6%

3.7%
1.8%

2.7%

2.1%

UK

FranceNotes: High-tech Industries are characterized by high internal R&D expenditures ranging between 2.5% and 7.0% of the average OECD turnover; cutting-edge technologies
feature an internal R&D intensity of more than 7.0% of the average OECD turnoverSource: German Institute of Economic Research (DIW) 2021

High Tech Exports 2019
in EUR billion

China

639.1

EU-28

625.6
186.3

Germany

Location Advantage: Innovation Value Added
Research and development expenditures in Germany are
dominated by manufacturing – EUR 64.3 billion or around 85
percent of the private sector’s internal R&D expenditures are
spent by the manufacturing industry. Data issued by theGerman Institute of Economic Research (DIW) finds that noother industrialized country boasts a larger share of grossvalue added in industries applying high-level technologies.

USA

Japan

Germany

3.5%

5.6%

7.1%
3.0%

Diverse Innovation LandscapeIndustrial research is Germany’s key source of innovation. In
2019, domestic companies invested more than EUR 75 billion
in developing new technologies for competitive products. Sixof the EU’s top ten R&D companies are German enterprises,with car manufacturer Volkswagen leading the ranking. Germany’s innovation landscape represents various research
players, with industry a major player in contract research.
Companies invested EUR 22.7 billion in third-party research.
Successful research in Germany is based on efficient cooperation between companies, universities, and research organizations. A national cluster network combines cooperative
research along the value chain with traditionally strong andworld-leading industries.

Share of Research-intensive Industries in Gross Value
Added 2018

9.3%

Innovation Leader Germany
In 2019, Germany was Europe's biggest R&D spender, with anannual budget of EUR 110 billion. Since 2009, R&D expenditures have been increasing steadily at an annual rate of morethan five percent. Growing R&D expenditures are considered
to be among the most important reasons for the dynamic
growth of the German economy. Industry, in particular, has
increased its R&D expenditures significantly in recent years.
More and more companies are establishing R&D facilities inGermany. Between 2016 and 2019, the stock of foreign direct
investments in R&D in Germany grew by almost 150 percent
to more than EUR 2.6 billion.

139.4

United States
France

107.9

Japan

92.9

Netherlands

77.8

UK 69.8
Czechia

33.8

Poland18.2

Hungary

16.5

Spain

13.5

Slovak Rep.

7.2

Source: World Bank 2021

In 2019, Germany exported high-techgoods to the value of EUR 186.3 billion –making the country the top high-tech
exporter in Europe and second only
worldwide.

ECONOMIC OVERVIEW GERMANY: INNOVATION

R&D Leadership
Public R&D Support: Germany’s High-Tech Strategy
The German government's High-Tech Strategy promotes
the advancement of new technologies by creating synergy
effects between industry and institutional research. Most
programs within the framework of the High-Tech Strategy
aim at promoting partnerships between different project
partners – particularly enterprises and research institutes –in order to bring together institutional research and entrepreneurial expertise. Research and development projects canaccordingly count on generous financial support in the formof R&D grants. Interest rate-reduced loans and special partnership programs complete Germany’s public R&D project
support.

"The excellent research environment, the care
and attention to detail, and the mentality tokeep improving on excellence – all of theseimportant factors in the birth of a new andsuccessful company are here in Germany.“
Dr. Xiaomao Wu, CEO & Founder, Gridworld GmbHWorld Class Know-How
While Germany is home to the largest population ofresearchers in Europe (more than 24 percent of all EU
researchers work and live in Germany), German R&D personnel is involved in R&D projects all over the world. The results
generated by staff of the Max Planck Society, for example,
are achieved in close cooperation with more than 6,000 partners located in no less than 120 countries. Cooperation projects between companies and academic research institutes
are an efficient way to tear down the barriers to innovation.
European Patent Leader
With more than 20,000 patents granted by the European
Patent Office in 2020, Germany’s share exceeds that ofFrance, the Netherlands and the UK combined. This underlines the commercial importance of innovations made inGermany. The country is also one of the leading European
nations in triadic patents (i.e. patents registered at the threemajor global patent offices – the European Patent Office, theUnited States Patent and Trademark Office, and the Japan
Patent Office).
Investing in Innovation
Non-university research institutes, universities and companies all work together in numerous clusters throughout thecountry to create or improve products, services and processes. The German federal government has been providing

ECONOMIC OVERVIEW GERMANY 2021 | gtai.com

Research Professionals* by EU-27 Country 2019

Other
EU Countries 22%

Germany 22%

Sweden 3%
Netherlands 5%

France 14%

Poland 5%
Spain 7%
Italy 10%

UK 14%*Note: Full-time equivalents
Source: Eurostat 2021

targeted financial support for more than 20 years. According
to the German Federal Statistical Office, universities invested
approximately EUR 19 billion in R&D in 2019. Germany’s
non-university research foundations – Max Planck Society,
Fraunhofer-Gesellschaft, Helmholtz Association, and Leibniz
Association – provided an overall research budget of morethan EUR 6 billion for the same year. With more than 55,000
full-time equivalent research personnel working at morethan 250 institutes, these organizations are involved in a
broad spectrum of research projects – covering everythingfrom fundamental research to applied science.
Germany's Hidden Champions
Among Germany’s small and medium-sized enterprises(SMEs), also known as the German Mittelstand, there is agroup of around 1,200 companies who combine outstanding
R&D performance with the highly successful international
marketing of their products and services. These enterprises
are often referred to as the “Hidden Champions.” Their R&D
expenditures are often in the area of between 10 and 18
percent of their sales volumes.

ECONOMIC OVERVIEW GERMANY: LOCATION

Germany: At the Crossroads of Europe
Situated at the center of Europe, Germany’s optimal location
is beyond question: Over half of the EU population lives
within 500 kilometers of Germany’s borders; more goods
pass through Germany than any other European country;
and almost all of Europe is reachable within three hours by
air or 24 hours by road.

Swedenplane

Finland

3 h byRussiaNorwayEstonia

1.5 hLatviaLithuania

Denmark

RU

Belarus

Ireland
UK
PolandNetherlands
Belgium

15 h

SlovakRepublic

France24

Portugal

h

by

u
tr

h

UkraineCzechia

Luxembourg

1230 h by train

GERMANY

Austria
Switzerland

Moldova

Hungary

Slovenia Croatia

Romania
SerbiaBosniaHerzegovina

ck

Italy

Montenegro

Bulgaria
KosovoMacedonia

Albania
Greece

Spain

Malta

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TurkeyECONOMIC OVERVIEW GERMANY: RESEARCH AND DEVELOPMENT

Innovation “Made in Germany”
Germany significantly invests in cutting-edge technologies.
With R&D investment of EUR 110 billion in 2019, Germany
invested more than the UK (EUR 44 billion) and France (EUR
53 billion) combined. Research and development expenditures of individual German states often correspond to thoseR&D Expenditure
Equivalents by Federal
State 2019of entire European countries. The R&D spending of BadenWuerttemberg, for example, is comparable to that of Italy.
The R&D expenditure of Bavaria is almost equivalent tothose of Spain, Portugal and Greece, combined. The state ofNorth Rhine-Westphalia invests more in R&D than Spain.

Schleswig-Holstein ⩠Hungary
Mecklenburg-Vorpommern ⩠Romania

Hamburg ⩠ Portugal

Bremen ⩠ Baltic States
Niedersachsen ⩠Denmark+Iceland

Hessen ⩠ Norway

Brandenburg ⩠Slovakia

Saxony-Anhalt ⩠Baltic States

Saxony ⩠ Czechia
Thuringia ⩠Slovenia+Croatia

Rheinland-Pfalz ⩠IrelandGermany

North Rhine-Westphalia ⩠Spain

Berlin ⩠ Poland

ECONOMIC OVERVIEW GERMANY 2021 | gtai.com

UK
EUR 44 bn

EUR 53 bn

Source: Germany Trade & Invest based on Eurostat 2020 and Federal Statistical Office 2021

Bavaria ⩠Spain+Portugal+Greece

EUR 110 bn

Baden-Württemberg ⩠Italy

FranceSaarland ⩠Bulgaria

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ECONOMIC OVERVIEW GERMANY 2021 | gtai.com

CONTACTFDI Competence Center
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Thomas Bozoyan is the senior manager in the FDI Competence Center at Germany Trade & Invest. The FDI Competence Center is responsible for preparing economic analyses
and information pertaining to foreign direct investment
levels in Germany. Located in Germany Trade & Invest's
Investor Support Services division, the center supports
investor acquisition activities through the provision of FDI
reporting, economic data and international location study
reports. With more than a decade of experience, Thomas isa senior market intelligence specialist with a specific focus
on the German business environment and Germany as aninvestment location.

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Germany Trade and Invest
Gesellschaft für Außenwirtschaft
und Standortmarketing mbH
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Executive Board
Dr. Jürgen Friedrich, Chairman/CEO
Dr. Robert Hermann, CEO
EditorWilliam MacDougall, GTAI
AuthorThomas Bozoyan,Market Intelligence Germany, GTAI
thomas.bozoyan@gtai.com

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Notes
All rights reserved©Germany Trade & Invest,
July 2021

Reproduction, in whole or in part,
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About Us
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info@gtai.de
www.gtai.deThomas Bozoyan
Market Intelligence Germany
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