Accra:Germany's emphasis on middle-technology research is undermining its competitiveness, while reallocating spending toward high-tech fields can enhance economic growth, as highlighted by a report from the Ifo Institute.

According to Anadolu Agency, Ifo Institute researchers Oliver Falck and Yuchen Guo identified an innovation deficit termed the middle-technology trap as a key factor in Europe's sluggish economic growth. Their study indicated that rapidly expanding economies prioritized research and development in high-tech sectors such as biotechnology, IT hardware and software, and aerospace.

In contrast to the US and China, Germany's research and development efforts are predominantly concentrated in middle-technology industries, including machinery and automotive manufacturing. In 2023, high-tech sectors constituted 68% of manufacturing R&D spending in the US, whereas Germany's proportion was merely 20%.

Germany's middle-technology share comprised 76% of its manufacturing R&D spending, significantly higher than the sample average of 56%. The researchers analyzed data from 18 countries between 2000 and 2024, discovering that a 10-percentage-point increase in the high-tech R&D share correlated with a 0.5-percentage-point rise in annual per capita growth over the medium term.

The study found no direct link between the overall R&D spending level and per capita economic growth. It noted a decline in Germany's high-tech R&D share from 32% in 1995 to approximately 20% in 2023. The authors emphasized that merely setting quantitative R&D spending targets is inadequate and called for policymakers to reform innovation framework conditions.