Increased investment in R&D due to robust economy

A few days ago, Mr Jürgen Hambrecht, who is vice-president of the Stifterverband für die Deutsche Wissenschaft and chairman of the BASF SE, announced that in 2008 the R&D expenditure by companies may for the first time exceed the 55 billion Euro barrier.

After years of stagnation investment in R&D had already increased from 48.4 to 52.0 billion Euros (+7.4%) in the period from 2005 to 2006. In the year 2007 investment in R&D once again grew to an estimated 54.2 billion Euros which would be another clear increase by 4.2% in comparison to 2006. For the year 2008 companies expect another plus of 2.2% to 55.4 billion Euros.

The R&D growth rates of 7.4% in 2006 and 4.2% in 2007 clearly exceed the inflation rate as well as the growth rates of GDP which were 2.5% and 2.2% respectively. Over the two recent years German and foreign companies invested more money in research and development (R&D) in Germany both in nominal and in real terms. For the first time since 2003 the share of R&D expenditure as a proportion of GDP increased (to 2.53%) in the year 2006. The contribution by private businesses spent on R&D as a proportion of GDP increased from 1.72% in 2005 to 1.77% in 2006 and is estimated to reach once again 1.77% in 2007.

Mr. Hambrecht stressed the necessity of much more commitment to R&D on the part of the government and private businesses. Simple production carried out in Germany did not secure Germany’s future, and subsidies for such production, according to him, is wasted money which was needed elsewhere.

The increased R&D spending also led to an increased number of researchers, laboratory assistants and technicians. Thus, in the year 2006 about 312.000 people worked in the field of R&D in private businesses and institutions which is a plus of 2.5% as compared to 2005. For 2007 experts of the Stifterverband expect another increase by 2.2% to 320.000 people.

It is warned, however, that the limited availability of specialists limited the growth of the R&D sector. It therefore calls for better training of students at universities and better quality of teaching. GERMAN