University R&D

Cooperation Can Stop German Firms from Going Overseas for Research

An Indian chemist working for Germany's BASF in Mumbai. Source: BASF
An Indian chemist working for Germany's BASF in Mumbai.

Germany’s current debate on the relationship between business and science is being waged using incorrect assumptions. While critics cite a growing influence of industry on university research, the exact opposite is happening. German businesses are increasingly relying on overseas research while withdrawing from involvement from the country’s colleges and universities. This may calm the critics, but it should instead be seen as an alarm signal.

We do not need less cooperation between businesses and universities – we need more.

Despite the impression given by the media, German industry is playing an increasingly smaller role as a source of third-party funds for the country’s universities. In 2005, the percentage of external funds from industry was at 28.1 percent, but by 2012, it declined to a historic low of 19.9 percent. Now, over 70 percent comes from the state or state-financed sponsors.

The reasons for this development are complex. For example, the state has distinctly and disproportionately expanded its involvement through various research packages and excellence initiatives. The expenditures of companies for university research have risen in absolute numbers – 3.9 percent annually – but not as strongly as industry research spending in general.

German companies today do 78 percent of their own research and development and spend €53.8 billion ($71.91billion) annually with 22 percent spent outside Germany. In 2005, 11.3 percent of research funding was flowing to German institutions, but by 2011, the percentage plunged to just 6.8 percent, the lowest level since 1991, when statistics were first compiled. While domestic universities and colleges are getting less than their fair share from research investments, the percentage of research conducted for businesses outside the country has risen dramatically.

In the last two reports filed by the German Commission of Experts for Research and Innovation, the increase in spending by German companies on research abroad was clearly explained. Industries are seeking access to new markets and specific know-how with automobile manufacturers and engineering and machinery firms leading the way by increasing overseas research spending by 25 percent annually. Information and communications technology companies as well and genetic and medical technology companies also are increasing their dependence on research abroad, where they specifically cite broader and deeper understanding of their needs.

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