Geography Reference
In-Depth Information
characterizes medium high-tech industries. In the latter the German system has its
strength.
Noticeable comparative advantages exist in medium high-tech, and also specii c
advanced technology i elds of the core industries - like vehicle construction, mechanical
engineering, electrical engineering and the chemical industry. Patents, particularly the
RPA (relative patent activities) indicator, are used to compare the new knowledge pro-
duction of dif erent economies.
Inter-country comparison shows that Germany not only has the highest specializa-
tion i gure in advanced technology i elds, but also that this specialization expanded
between 1991 and 2004 (Table 19.2).
5
The number of patents, export specialization
and an above-average share of world trade in the automobile manufacturing, mechani-
cal engineering, and electrical engineering sectors demonstrate Germany's strength in
application-oriented advanced technology innovation.
Particularly research based on the VoC approach has elaborated the role played by the
key institutional coni gurations in the development of the specii c innovation proi le. The
interdependence and complementary nature of the dominant institutional settings - the
coordinated system of industrial relationships, the labour market institutions, the closely
knit education and training system and the specii c i nancial institutions - reinforce
the international competitiveness of the core industries by contributing to the accu-
mulation of specii c competencies (Naschold, 1997; Soskice, 1999; Streeck, 1997). The
path-dependent specialization pattern of the national innovation system based on the
co-evolution of the technological and institutional development path has not changed
much in the last decade.
The downside of this specialization pattern is the associated structural weakness of the
system - namely the comparative disadvantages in top grade technologies characterized
by more radical innovation processes and knowledge-intensive service industries. High-
technology goods are of only minor importance in exports (Table 19.1) and the patent
applications in high-technologies are still underrepresented in international comparison.
The share of R&D expenditures in services and high-technology sectors is far below
the OECD average both in 1991 and in 2003 (Table 19.2). In services the share of R&D
expenditures in 2003 was by average three times higher in the OECD than in Germany.
Only in one high-tech industrial sector - medical precision and optical instruments - did
German R&D expenditures reach the OECD average (Table 19.2). As underlined by
empirical indicators, the German innovation system did not succeed in establishing itself
in the new science-based industries characterized by radical innovation and knowledge-
intensive service industries, like the software industry.
The interplay between institutional settings, competencies and the quality of demand
was identii ed as constitutive for the path-dependent development of innovation systems.
How this co-evolving interplay af ects the development of the German software industry
will now be analysed in more detail.
Industrial organization
The comparatively high degree of vertical integration of
business-related service functions in international terms is an essential element of the
competitiveness of the core industrial sectors of the national innovation system. This
kind of institutional organization fosters the
competence building
that produces complex,
systemic technology- and service-intensive goods. The industrial i rms of the key sectors
