Indicator 9.1.a Private and public expenditure on research and development

Text from the Indicator Report 2022 

Research and development (R&D) are scientific activities and are defined as creative and systematic work to expand the level of knowledge – including knowledge of humankind, culture and society – and the development of new applications based on the existing knowledge. The main criterion applied to differentiate between R&D and related activities is whether the activity involves an appreciable element of newness or further development.

The share of research and development expenditure in the gross domestic product (GDP) is determined annually by the Federal Statistical Office. Overall expenditure on research and development comprises expenditure by general government (including non-profit private research institutions), institutions of higher education, and businesses. The surveys and calculations adhere to the recommended methodologies of the Frascati Manual of the OECD on statistics about R&D, which also enable international comparisons.

Overall R&D expenditure in Germany in 2020 amounted to 106.6 billion euros, equivalent to 3.1 % of GDP. Hence, the indicator was 0.4 percentage points below the annual target of 3.5 % of GDP by 2025. If the past development continues, it can be assumed that the target value will not be reached.

Since 2000, the share of R&D in relation to GDP in Germany has increased by about 0.7 percentage points. Compared to 2000, the expenditures for R&D have doubled. Compared to the preceding year 2019, the expenditure for R&D activities decreased in the first year of the COVID-19 pandemic by 3.4 billion euros. However, this decline is completely limited to the economic sector and, in fact, the other two sectors recorded increments.

In 2020, businesses accounted for the by far largest share of R&D expenditure in Germany at around 66.6 %, with 18.7 % spent by institutions of higher education and a further 14.6 % by both public and private non-profit research institutions. Staff employed in R&D comprised around 733,831 full-time equivalents, a figure that includes only the share of their working hours actually spent on R&D work. Some 63.7 % of the staff work in businesses, 20.7 % in institutions of higher education and 15.6 % in public and private non-profit research institutions.

In an international comparison among OECD member states, Germany reached 3.1 % in 2020 and was ahead of Denmark (3.0 %) and Finland (2.9 %), further, Germany exceeds the value of the EU 27 region with its 2.2 % and the OECD average of 2.7 % of GDP. Eight States, for instance Sweden (3.5 %) or Japan (3.3 %), were ahead of Germany. On a national level, Baden-Württemberg at 5.7 % (year 2020) was far ahead of other German Länder, followed by Bremen at 3.7 % and Bavaria at 3.4 % of GDP.

The synoptic table provides information about the evaluation of the indicator in previous years. It shows if the weather symbol assigned to an indicator was rather stable or volatile in the past years. (Evaluation of the Indicator Report 2022 )

Indicator	9.1.a Private and public expenditure on research and development
Target	At least 3.5 % of GDP per year by 2025
Year	2017	2018	2019	2020
Evaluation