Economic development traditionally occurs in spurts: every significant technological advance initially brings significant productivity growth, which levels off over time – until the next technological revolution brings the next leap. Currently, the western economies in particular are only growing relatively slowly. Productivity growth in Germany has halved from 1.6 percent between 1997 and 2007 to 0.8 percent between 2012 and 2019, according to a recent McKinsey study.
A new impetus is missing. In the USA and Asia, this is coming from the large digital companies that are currently investing heavily in artificial intelligence. But these players are largely missing in Germany, according to the McKinsey authors: “Germany has a smaller information and communications technology sector.” Several current analyses, some of which are available exclusively to WELT, show what consequences Germany’s tech lag is already having.
The lack of investment could take its toll in view of the latest technological impulse coming from artificial intelligence: gross value added in the manufacturing industry could be increased by up to 7.8 percent through generative AI, according to the results of a study by the German Economic Institute on behalf of Google. Artificial intelligence, according to the IW researchers, has the potential to trigger the next industrial revolution: gross value added in Germany could grow by up to 330 billion euros through the use of AI.
But so far, there has been a lack of companies in this country that are currently driving a leap in the field of artificial intelligence in the USA, for example. Germany is in danger of missing the boat, warn researchers from the Kreditanstalt für Wiederaufbau in a recent study that WELT has exclusively obtained: “One of Germany’s key weaknesses in artificial intelligence is that it is not established as a provider of AI solutions. The gap between Germany and the leading countries is considerable,” write the KfW researchers, and use several key figures to show this in an international comparison.
The first indicator is the relatively low number of patent applications in the field of AI research: Germany’s share of AI patents registered worldwide is 6 percent – well behind the leading countries China and the USA with 29 and 27 percent respectively. “Germany’s weak position in artificial intelligence is largely due to the low level of patenting activities,” warn the KfW researchers, pointing to the lack of growth momentum.
The number of patent applications in China has increased more than a hundredfold since the beginning of the 2000s. In countries such as South Korea, the USA and Japan, growth is still 20-fold and six to almost five-fold respectively. In Germany, on the other hand, the number of patent applications has only increased by just under three times, according to the KfW analysis.
As a second important indicator of Germany’s competitiveness in the field of artificial intelligence, KfW examines foreign trade statistics: German AI companies lag far behind their foreign competitors, and Germany is a net importer of AI technology. “Germany has a comparative disadvantage here; we import much more than we export,” explains KfW chief economist Fritzi Köhler-Geib.
According to a recent survey by KPMG among large German companies, German companies are planning significant investments in AI technology: 53 percent of companies plan to increase investments in generative AI in the next 12 months, half of them by 40 percent or more. However, it is mainly foreign providers who benefit from these investments: The most widely used AI models currently in use in the German economy include Google’s Gemini algorithm (34 percent market share), Microsoft and OpenAI’s GPT language model (34 percent) and the German player Aleph Alpha in third place with 13 percent.
The dominance of US companies in Germany is particularly notable because Germany is also relatively strong in research, says KfW researcher Köhler-Geib. “We are well positioned in the area of university research – but this is currently not resulting in enough economic success.” The KfW researchers therefore propose a dual strategy: “In the short term, one key thing is for companies to increasingly develop and use AI applications based on existing models and thus build up skills. On the other hand, we must expand basic research.”
Germany cannot afford to lag behind in the long term. The use of AI is too important, especially in light of the demographic development in this country. “Artificial intelligence can at least partially compensate for the shortage of skilled workers in the medium term. The incentives to invest more here in the future are accordingly high,” says Köhler-Geib.
But it is precisely these investments, especially in German AI startups, that are currently lacking, says Daniel Abbou, Managing Director of the Federal Association of AI Companies. “There is a lack of commitment and willingness to take risks among European investors.” In addition, there is a lack of government incentives and government commitment, for example in the area of expanding computing power.
“We currently have too little computing capacity for training artificial intelligence in Germany and Europe.” Promising AI start-ups are therefore often financed by investors from the USA – or bought outright. “We are in danger of becoming completely dependent on non-European companies,” warns Abbou.
