„We cannot allow the United States and China to determine the technological future on their own – for our prosperity, for our security and ultimately also for our freedom,“ said Federal Chancellor Friedrich Merz (CDU) recently in Berlin, presenting a high-tech agenda. He lamented that Germany had recently become „somewhat sluggish“ due to its decades of success. According to him, this must change because it is also a matter of the country's technological sovereignty.

In this context, Germany's excellent research base is always referred to in technology debates to put things into perspective. In quantum computing, chip design, biotechnology and artificial intelligence, for example, Germany is at the forefront of innovation. The only problem is that these successes are not being implemented quickly enough by the private sector. Instead, once a technology reaches a certain level of maturity, many top researchers are drawn to start companies abroad – or foreign companies snap it up right away. So, is it all just a question of poor start-up culture?

Recent data from the Organisation for Economic Co-operation and Development (OECD) now shows, however, that Germany may also be running into new problems in research and development because other countries have been quicker to modernise their funding strategies. On top of that, capital expenditure, particularly in sectors such as AI that are considered to be decisive for the future, has now reached such levels that direct government funding is hardly significant anymore.

Looking at total R&D expenditure, Germany still ranks in the top third, in eighth place, with a share of 3.11% of economic output (GDP). However, according to OECD data, Israel, South Korea, Sweden, the USA, Japan and even Belgium and Austria are much more committed to this area.

The structure of government research funding in this country also seems to be less focused on clusters than in many other countries. The lion's share is still invested in basic university funding. In addition, expenditure on defence research, for example, the results of which also find their way into many civilian products, is virtually non-existent in this country, whereas it plays a much greater role elsewhere.

And when it comes to promoting research in the private sector, the German government apparently continues to rely too heavily on direct subsidies, while most other countries – also in view of the enormous capital expenditure involved in modern technology research – are tending to switch to tax incentives. According to the OECD, more than half of the member states have now switched to indirect aid in view of the changes in the research landscape.

In the OECD's view, countries should also make greater efforts to open up the public research ecosystem to private capital. Furthermore, public institutions need to focus more on cross-disciplinary research in order to escape the silo mentality of separate research disciplines. The sciences are becoming increasingly intertwined. Synthetic biology and quantum computing, for example, would make better progress if they were pursued jointly.

The fact that Germany is also losing influence in the high-tech sector is not only shown by surveys in the latest CFO Survey conducted by Deloitte management consultants. New data on the flow of direct investment also points in this direction. In the EU, foreign direct investment increased by 4% in the first half of 2025, according to the OECD. However, Germany in particular has seen „higher equity-oriented outflows combined with increased reinvestment of profits,“ the report states. Around 37 billion dollars in outflows in the first two quarters of the year were offset by 24 billion dollars in inflows – the latter mainly due to intra-company transfers