With regard to its innovational capability Germany ranks 8th among 17 industrialized countries. At the top are Sweden, the USA, Switzerland, Finland and Denmark and at the bottom end Spain and Italy. As far as its educational system is concerned, Germany is second from the bottom. This is the finding of a study called „innovation indicator“ which was carried out by the German Institute for Economic Research (DIW) in Berlin on behalf of the Telecom foundation and the Association of the German Industry (BDI).
The midfield of this ranking which ranges from Japan (6th) to Ireland (15) is much lagging behind the leading group. Even though the DIW confirms that German companies have very high innovation potential, that there is intensive competition and a positive networking between business and science in Germany, major weaknesses curbing innovation are identified to be an inadequate educational system, not enough university graduates, a lack of risk capital and too much regulation.
Furthermore, the number of women shaping the innovational process in Germany is too small. Highly-qualified women in Germany are most of the time working in the field of public services which is little innovative.
As a research site Germany competes with west European countries. The most important competitors are the German neighbors Austria, Switzerland and France. The importance of North America as a research site for German business has weakened since the 1990s, but still plays a crucial role. Research abroad is in general based on intensive research in Germany which means that German companies direct their research activities outside Germany in particular in those fields in which they have been doing intensive research for a long time.