An overview of the German research and innovation system
The success of the German research and innovation system results from a multi-layered interaction of different framework conditions and influencing factors. The structure of the German R & I system is determined by the structure of the federal state, the size and orientation of German economy and its actors. With regard to social and global challenges, a diverse research and enterprise landscape is required, which is supported by various institutions and actors. State funding for research and innovation is based on several pillars. The legal framework is the Basic Law. The federal government, the states and the European Union also work together. The pact for research and innovation as well as the promotion of research buildings including large-scale facilities at German universities represent the high commitment of the Federal Government on this matter. A range of instruments provides required supports: project funding, institutional support and funding of research. Research and development are conducted in various public and private institutions. Expenditure on R & D is statistically recorded either at the funding institutions (financial analysis) or at the research organization (implementation review).
The federal and state governments as financing actors
The federal and state governments are major participants in funding research and development. The legal basis of state funding for science, research and teaching is the Basic Law as well as the constitutions of the individual Länder. Important framework conditions also arise from the federal budget regulations and the corresponding state regulations. Various funding instruments are available for targeted research funding: The medium- and long-term institutional funding jointly funded by the federal and state governments serves to secure the entire spectrum from basic research to application-oriented research, the research infrastructure and the strategic orientation of the German research as a whole. The federal and state project subsidies serve to promote temporary research, technology and innovation projects. Project funding primarily addresses the promotion of application-oriented research. The federal government and the federal states spend roughly one third of gross domestic expenditure on research and development.
Economy
The private sector finances about two thirds of the annual R & D expenditure in Germany. This appropriation will be used both for companies' own R & D activities and for joint R & D projects with partners from business and academia circles. The R & D in the economic sector is highly application-oriented. Its main goal is to achieve immediately usable results. By contrast, basic research in the private sector that is less important. R & D activities vary widely from region to region. They are mostly determined by large companies. Despite their lower share, small and medium-sized enterprises (SMEs) as well as start-up companies make a significant contribution to the innovative performance of the German economic sector, because they are often the source of pioneering innovation. A further structural feature of the private sector from High-tech industry in Germany is its high concentration of R & D capacities comparing with other countries in the world.