The German economy signifies quality. The German economy signifies productivity. But sadly, nowadays, it does not signify innovation.
Statistics show that the number of companies founded in Germany decreased from 428.000 in 2012 to 378.000 in 2016, a total decrease of 12%. Looking back 10 years ago, there were 25% fewer companies founded in Germany in 2016 than in 2007.
There are several reasons behind this. A study by HHL Leipzig Graduate School of Management found that possible hurdles for entrepreneurs starting up a company include:
To encourage business growth across the country and solve the lack of start up support for innovative new businesses, the YES! team of the BBSW1 – Ludwigshafen invented the idea of Company Gateway.
The Solution – Company Gateway
Our idea, Company Gateway, will grow the start up economy in Germany and support innovative new firms. Company Gateway will be a governmental organisation and it will:
Company Gateway will decrease risks aversion and due to that also the critic by the society if your company fails.
Company Gateway will reduce risks due to:
Company Gateway will support innovative businesses additionally due to an annual competition at which the most innovative start ups of the year can win funding for their business.
The company with the most sustainable production plan has also the possibility to win funding for improving their production plan further.
Technological progress through innovation is probably the most important driving force of the productivity (and in turn welfare) growth of developed economies. An example of such technological progress is named Moore’s Law. Moore’s Law states that the computing power of new computer chips doubles about every two years. This exceptional technological performance has been observable for more than 50 years now and represents an impressive example of exponential growth (exactly 35% per year) of our technological opportunities. In the more recent past, however, this exponential growth could only be maintained through a massive increase in expenditures on research and development (R&D). The graph below illustrates the phenomenon: the largest semiconductors manufacturers (Intel, Samsung, Siemens, etc.) needed to increase their R&D expenditures by nearly 80% over the last 45 years to maintain Moore’s law.
In this project, the social chances and risks of different national innovation strategies are to be compared and discussed, in order to derive recommendations for future political action.
How can (and should) policy react to the decreasing returns to R&D? Should the trend towards more specialisation be actively encouraged – so that at least parts of the companies and regions will remain internationally competitive in the future and will be able to compete with the USA or China? Should research and development and the foundation of start-ups be particularly promoted in a few promising sectors? Should curricula of schools and universities be aligned with the needs of innovative industries? Alongside opportunities, such a strategy also entails major risks. What would it mean, for example, for the equality of opportunities between sectors and regions and, above all, for the people working there? And how would we determine which technologies are worth being promoted? Or should policy rather try to counter the growing specialisation in the economy in order to ensure the equality of opportunities – for example, by particularly supporting the weakest sectors and regions? Is the best policy response possibly “Trumponomics”? Namely, that we close ourselves off from international markets in order to escape the growing competitive pressure for the best ideas in the world?
The topic “National Innovation Strategies” was proposed by researchers of the Centre for European Economic Research (ZEW) in Mannheim. The YES!-teams are supported by the researchers Florence Blandinieres, Paul Hünermund and Martin Murmann.
Get to know the YES! 2017 Team of the BBS Wirtschaft 1 Ludwigshafen on their profile page here. If you would like to know more about our YES! 2017 team of the Albertus-Magnus-Gymnasium Stuttgart please follow this link to their profile page.