Maintaining the innovation capabilities of firms, employees and institutions is a key component for the generation of sustainable growth, employment, and high income in industrial societies. Gaining insights into the German innovation system and the institutional framework is as important to policy making as is data on the endowment of the German economy with factors fostering innovation and their recent development. Germany's Federal Ministry of Education and Research has repeatedly commissioned reports on the competitive strength of the German innovation system since the mid-eighties. The considerable attention that the public and the political, administrative and economic actors have paid to these reports in the past few years proves the strong interest in the assessment of and indicators for the dynamics behind innovation activities. The present study closely follows the pattern of those carried out before. It has been extended, however, to include an extensive discussion on indicators for technological performance and an outline of the key features of the German innovation system.

Research and innovation are extremely important for Germany. New insights are generated by research, and new ways of creating value are opened up by technical, organisational, and other innovations. Production, value-creation and employment tend to increase much more in companies which are highly innovative. The public sector can become more efficient and customer-oriented through the implementation of innovations, which also have a positive influence on people's welfare and their quality of life.Against this background, Germany's politicians have increasingly been considering how best to promote research and innovation, and where the country ranks in the international innovation contest. The Federal Government of Germany therefore decided in 2006 to establish an independent Commission of Experts on Research and Innovation (EFI), with the remit to analyse the structures, trends, performance, and prospects of the German research and innovation system, and to formulate policy recommendations for its further development. This report is the result of our work to achieve this goal.

The concept of National Systems of Innovation was introduced as a method to describe the various elements which contribute to innovation performance and their interaction. In this book, the innovation structures of a broad set of countries are compared. It provides more than a pure compilation of quantitative indicators for international benchmarking, supporting an appropriate interpretation of the referring results and suggesting relevant conclusions for innovation policy.