Bavaria

Region

Introduction

The Free State of Bavaria is one of 16 German federal states (Bundesländer) located in the southeast of the Federal Republic of Germany, bordered by four other federal states: Baden-Württemberg, Hesse, Thuringia and Saxony. Bavaria also has international borders with Austria and the Czech Republic. By the end of 2018, its total population was 12.99m, approximately 16% of the national total. It is the second most populated federal state (Eurostat, 2019). Its capital city is Munich. The Free State of Bavaria has a surface area of 70,552 km2, with a population density of 184.2 inhabitants/km2. Bavaria is one of Europe’s most competitive industrial regions with a pronounced specialisation on the automotive industries, electrical engineering, mechanical engineering automation and robotics.

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Economy

Socio-economic profile:

In 2017, the regional gross domestic product (GDP) of Bavaria was €597b, accounting for 18% of the overall German GDP (Eurostat, 2019). This share has been relatively stable over the past decade with an average growth rate of 3.5% between 2008 and 2017, above the German growth rate (2.7%) and the European growth rate (1.8%) during the same period. Regional GDP per capita reached €42,400 in 2017, which amounts to 116% of the German average (€36,400) and 144% of the European average (€29,500) (Eurostat, 2019). Moreover, in 2018, Bavaria is the second largest exporter in Germany: Bavaria’s exports represent 18.7% of the global exports in Germany (behind Baden-Württemberg with 19.9%). The export volume of Bavaria amounted to €190,5b (Statistisches Bundesamt, 2019).
The regional labour force in 2018 amounted to 7.1m persons, 16.5% of the national total (Eurostat, 2019). Most employees work in services (66.9%), whilst 31.5% work in industry and construction and 1.6% in the agricultural sector (Eurostat, 2019). These figures differ from the national averages (71.4/27.4/1.2%), indicating a strong emphasis on industry. In 2018, unemployment in Bavaria was at 2.2% and has been decreasing since 2014 (2.9%) and it is well below the national average of 3.4% as well as the European average 6.9% and is the lowest of all German states (Eurostat, 2019).
Bavaria is the second largest host of companies in Germany (622,156), behind North Rhine-Westphalia (717,282), in 2017 (Statistisches Bundesamt, 2019). The share of SMEs in Bavaria represents 99.6% of the total number of companies present on the territory. There were 619,648 SMEs registered in Bavaria, in 2017 (Statistisches Bundesamt, 2019).
Bavaria's economy has undergone significant structural changes over the past 50 years, shifting from a traditional agricultural region towards one of Europe’s most competitive industrial regions, featuring an important and growing services sector. Important industry branches are automotive industries (including related supply chain sectors), electrical engineering, mechanical engineering automation and robotics. In addition, Bavaria is one of the leading international regions for high technology fields such as information and communication technologies (ICT) and life sciences. It is among Germany’s most important regions in the services sector, major branches being insurance and financial services. Also, tourism is playing an important role in the region (Invest in Bavaria).
Nevertheless, there are large regional economic disparities within Bavaria. The main economic activities are concentrated around the Munich area with several global players in the automotive industry (Audi, BMW, MAN, Knorr-Bremse), ICT (Siemens), media and publishing as well as a strong defence industry sector. Other important regional concentrations include Nuremberg, Augsburg and Ingolstadt. The rural areas (about 85% of the region) in Bavaria are also important, and they are home to almost 60% of the population who live, work and have businesses there (Invest in Bavaria).

Research, Development & Innovation

RTDI profile:

The overall RTDI intensity in Bavaria can be characterised as high in comparison to other German regions. R&D intensity in 2015 rose up to 3.15%, of the regional GDP (€17.3b in total) of regional GDP. The RTDI sector is industry-oriented by German standards: in 2015, the share of regional business expenditure on R&D amounted to 77.0% (above the national average of 68.7%). In 2015, the region's overall expenditure on R&D contributed to 19.5% of the German total.
In 2012, the number of European Patent Office (EPO) patent applications (4631) represented up a 25.3% of the national total. Thus, there are 36.7 patents per 100,000 inhabitants (national average 22.6) (Eurostat, 2019).
Another reason for Bavaria’s outstanding RTDI performance is its diverse and multifaceted institutional research landscape. Three different types of institutes play an important role in the higher education system in Bavaria, as well as in Germany: universities, universities of applied sciences (Fachhochschulen) and art academies. Bavaria hosts nine public and six non-public universities. In addition, nine art academies and 17 public universities of applied sciences as well as 11 non-public universities of applied sciences (Fachhochschulen) are located in Bavaria (Bayerisches Staatsministerium für Wissenschaft und Kunst).
As regards non-university research, 13 institutes of the Max Planck Society, several institutes and research groups of the Fraunhofer Society, three centres of the Helmholtz Association, and six institutes of the Leibniz Association are located in the region. Moreover, the Max Planck Society, the Helmholtz Association of German Research Centres and the Fraunhofer Society have their headquarters in the Bavarian capital Munich (Bayerisches Staatsministerium für Wissenschaft und Kunst). In addition to the institutes of the major German public research societies, there are several independent institutes closely connected with, but legally independent from, universities (so-called An-Institute) as well as different research centres at the universities of applied sciences.
The Technical University of Munich (TUM) is one of Europe’s highest ranked Universities. The 15 departments host 41,375 students and 1,027 PhD candidates (2018). The 15 departments are divided under four themes: mathematics and natural sciences, engineering and architecture, life sciences and health sciences well as social sciences.
Bavaria hosts many knowledge and technology transfer units. Moreover, there are several clusters and research networks with an international reputation located in the region. In the framework of the “Bavarian Cluster Initiative”, the Bavarian State government supports 17 platforms dedicated to high-tech industries and traditional industries in order to build networks of companies and research institutes. This initiative aims to boost the competitiveness of Bavarian companies in five different areas; digitalisation, energy, health, materials and mobility (Cluster Offensive Bayern).
The numerous institutes, universities and clusters are allowing Bavaria to achieve one of the highest percentage of employees in the high-tech sector, in 2016, 5% of the Bavarian population worked in high-technology manufacturing and knowledge intensive services, a share higher than the national level (4.2%) and European level (4.1%) (Eurostat, 2019).
In addition, the tertiary education is above the German average of 34.9% with a rate of 39.9% but below the European average (40.7%).
In Bavaria, 89% of the households have access to broadband, slightly below the German average of 90%. The access has increased by 1-2% per year since 2014 (Eurostat 2019).

Regional Innovation Scoreboard results

Latest Regional Innovation Scoreboard results:

According to the Regional Innovation Scoreboard 2017, three of the seven sub-regions in Bavaria are characterised as “Innovation leaders” (Upper Bavaria, Middle Franconia and Lower Franconia), three as “Strong Innovators” (Upper Palatinate, Upper Franconia and Swabia) and Lower Bavaria is even characterised as “Moderate Innovator”. This is a devolution when compared to 2016 when six of the seven sub-regions were ranked as “Innovation leaders”.
Overall, regarding the indicators used for the Regional Innovation Scoreboard 2019, Bavaria performs very well and presents very good results in most of the RIS domains. With regards to details concerning EU average, Bavaria's particular strengths in the RIS 2019 were EPO patent applications with an excellent performance, especially in Middle Franconia, where the applications amount to 148% of the German average and 211% of the European average. The figures connected to marketing/organisational innovations show that Bavaria is performing overall very well in this domain. Swabia is performing best (normalised score: 0.720) followed by Upper Bavaria (normalised score: 0.622). Bavaria is also performing considerably better than the European average regarding employment in medium-high technologies manufacturing/knowledge-intensive services, Upper Bavaria has a particular strong performance with 180% of the EU average.
One of the weaknesses, which is found consistently across all the seven sub-regions, is the indicator for the collaboration between innovative SMEs. Lower Bavaria is the weakest region in this field (normalised score: 0.090), closely followed by Upper Palatinate (normalised score: 0.171). Meanwhile the lifelong learning indicator in all seven sub-regions is lower than the European average, indeed Lower Bavaria only reaches 60% of the German average and 46% of the European average.

Governance

Governance profile:

The governance of the innovation ecosystem of Bavaria is characterised by a multilevel governance. The State is the main implementing body of the innovation strategy and works according to frameworks enacted at both federal and European levels.
As a German federal state, Bavaria has substantial autonomy with regards to legislation and tax-raising powers, as well as a say in some matters of federal policy. The German Basic Law gives the states considerable autonomy in R&D policy. This is particularly the case for higher education policy where each state independently enacts its own legislative framework. Similarly, within the single states, the degree of autonomy of single higher education institutions is rather high in terms of profile and research agenda-setting. The responsibility for regional RTDI policy in Bavaria lies with the regional government (Bavarian State Chancellery) and is currently divided between two main ministries: the Bavarian Ministry for Economic Affairs and Media, Energy and Technology (BSWET) and the Bavarian Ministry for Education and Culture, Science, and Arts (BSUK).
The BSWET is responsible for R&D and technology funding. The BSUK is responsible for the universities, universities of applied sciences and the large-scale research institutions. In addition to BSWET and BSUK, the Bavarian Ministry of Interior, for Building and Transport (SSII) and the Ministry of Environment and Consumer Protection (BSUV) are also playing a role in the R&D technology funding. For the implementation of the Bavarian RTDI policy instruments, several (semi-)public bodies have been established: e.g., "Bavaria Innovative" (Bayern Innovativ GmbH), is responsible for technology-transfer activities, "Bayern Kapital GmbH", is responsible for venture capital financing.
The Bavarian Research and Innovation Agency is an important agency which supports innovative research projects and knowledge transfer activities, with the goal to support Bavarian based stakeholders in sustaining and strengthening its performance. In order to achieve this, five partner organisations are working together: Bayerische Forschungsallianz GmbH (BayFOR), Bayerische Forschungsstiftung (BFS), Bayerische Patentallianz GmbH (BayPAT), Bayern Innovativ GmbH and Projektträger Bayern (ITZB).

Policy

Policy trends profile:

Innovation policies in Bavaria are designed at three levels:

At the European level, the ERDF/ESF 2014-2020 OP and the Regional Innovation Smart Specialisation Strategy (RIS3);
In 2014, the Federal Cabinet adopted a new German High-tech Strategy entitled "Innovation for Germany". The Federal Government and the Länder consult with each other in describing and presenting the various relevant programmes and measures;
At the regional level, the strategy towards social, economic and technical development is described in one major strategic document (Gesamtkonzept für die Forschungs-, Technologieund Innovationspolitik der Bayerischen Staatsregierung).

Relevant policy documents can be found both at the European, and state level. At the European level, the innovation policy is shaped both by the ERDF operational programme (OP) 2014 – 2020 which defines the allocation of structural funds, and the Regional Innovation Smart Specialisation Strategy (RIS3), a document elaborated in collaboration with the state authorities to define the strategic areas of specialisation of the region.
The Bavarian government defines its regional innovation policy as a major element to strengthen the regional economy. The main underlying assumption is the overall global competition of regions for investors, growth and jobs. At the present time, there are several interconnected funding programmes with relevance to regional innovation policy. Major thematic areas of funding are: traditional industries such as the automotive industry, mechanical engineering, plant construction; cross-section technologies such as laser technology, micro-systems technology, mechatronics and new materials; innovative future technologies such as biotechnology, nanotechnology, aerospace technologies and information- and communication technologies; support of networks and clusters. A special emphasis lies on the support provided to networks and clusters.
The overall objective of the Bavarian research, technology and innovation policy is to permanently secure Bavaria a top position in the competition for innovative leadership in Germany and Europe. An excellent research environment, innovative companies, highly qualified employees and an active technology start-up scene attracts high-quality performers and creates the framework conditions for a creative environment, good social security, prosperity and high-quality jobs.
Further, Bavaria’s RTI policy is based on a broad support/funding of key enabling technologies as well as their underlying scientific fields, which in turn establishes the pre-conditions for many applications. Within this context, the following applications or technology fields have been deemed priority sectors:

Life sciences, especially biotechnology and system biology;
Information and communication technologies;
Efficient production technologies, mechatronics, automation and robotics;
New materials, intelligent materials, nano-and microtechnology;
Clean Tech – resources preserving energy-, transport- and environmental technologies, renewable resources (i.e. biofuels), e-mobility; and
Innovative, technology-based services.

These fields feature in the Bavaria smart specialisation areas as described in the regional Smart Specialisation Strategy (RIS3).
Recently, the Bavarian government has presented the “Bayern - FIT for partnership” programme, which subsumes a variety of different RTDI policy measures to strengthen the regional innovation potential within the next years until 2020 and beyond. It provides a comprehensive overview of the innovation policy mix of Bavaria by presenting all relevant measures with their geographical scope (whole of Bavaria vs. single sub-regions in Bavaria), financial volume, target groups, expected outcomes and a brief description of the measure.
Since 2005, the federal state has set up an agreement with the Bavarian universities regarding an innovation alliance, in which higher education policy objectives and the necessary services for their achievements by the state and the universities are agreed upon. For the first time, the six state Bavarian art schools are also involved. With the continuation of this innovation alliance (first for the period 2014 to 2018 with the Innovationsbündnis Hochschule 2018, and now with the Innovationsbündnis Hochschule 4.0), the universities have the necessary resources in order to face successfully the upcoming future challenges. Besides the previous terms of agreement, universities now also need to develop an international strategy.
In May 2011, the Bavarian state government adopted a comprehensive approach for research, technology and innovation policy for the upcoming years. Assuming that research, technology and innovation are crucial for social and economic development; the following strategic objectives of the Bavarian research, technology and innovation strategy have been formulated:

Strengthen public awareness of science and research;
Optimise conditions for research and technology;
Boost competitiveness and growth of businesses at all levels;
Align instruments of research, technology and innovation policy regionally balanced;
Strengthen Bavaria in the competition of EU and federal funds; and
Identify main issues of research and technology policy.

Further, as advances in ICT and the rapid development of the internet and its applications lead to profound modifications in the economy and society, Bavaria established a strategy for digitalisation which was finalised in 2015 (BAYERN DIGITAL I). In this context, several measures have been established in order to cope with these challenges, opening up new opportunities for the future and secure jobs and sustainable prosperity. The key areas of action of the campaign are the advancement of infrastructure (broadband coverage), IT security, the selective expansion of research, technology transfer and training, and the support for new business creation in the digital economy.
At the beginning of 2017 the Council (BSWET) adopted the BAYERN DIGITAL II plan, a comprehensive package of measures, which describes how to further develop the BAYERN DIGITAL strategy in the future. Together with the state government's first digitalisation programme, the BAYERN DIGITAL I master plan, some €5.5b are budgeted for the years 2015 to 2022. The BAYERN DIGITAL II master plan comprises a volume of €3.0b and an expected 2,000 new jobs. In the supplementary budget of 2018 alone, the state government plans to invest more than €1.0b and create 460 new jobs as a first step. The second stage of BAYERN DIGITAL is broader based and presents 10-key points for the digitalisation of the region.

Activities linked with Advanced Manufacturing

Activities linked with Advanced Manufacturing:

Bavaria is one of the strongest economic regions in Europe and enjoys an excellent reputation worldwide as a high-tech and industry location. The industry sector is the main engine of the economic development in Bavaria and a key driving force in the Bavarian value creation process. In addition, Bavaria is one of the leading international regions for high technology fields such as information and communication technologies (ICT).
Following this, Bavaria offers favourable conditions for advanced manufacturing (mostly discussed under as “Industry 4.0”). Overall, Industry 4.0 requires “embedded systems” in all manufacturing sectors for the realisation of intelligent, self-configuring and controlling products and production systems. Technologies such as big data, cloud computing, cyber-physical systems, machine-to-machine communication, RFID chips, etc. move more into the focus. These new developments result in various challenges.
In 2016, Bavaria established the Centre of Digitisation (Zentrum Digitalisierung Bayern ZD.B). The centre is a science-based network established at the Technical University of Munich. It brings together activities of companies, entrepreneurs, industry, higher education institutions and research institutes in Bavaria. So far, the focus is on the following topics: interconnected mobility, IT security, digital production, digital health/medicine, and digitalisation in the field of energy.
In order to ensure Bavaria becomes one of the leader’s in the start-up scene, the Bavarian Ministry for Economic Affairs and Media, Energy and Technology have founded the initiative Founding country Bavaria (Gründerland Bayern). The focus is on technology-intensive areas with the goal to establish a supportive ecosystem for start-ups, offering advice coaching and network support (BayStartUP).
The Fraunhofer Institute for Applied and Integrated Security (AISEC) is being further developed into a security centre of excellence of national and European importance. In order to address the new security problems associated with the topic of digitalisation and networking.
Much of the success of Bavaria in research and technology is based on the large-scale promotion of key technologies such as ICT. Following this, BICCnet, the Bavarian Information and Communication Technology Cluster, aims at activating and interlinking the innovation and productivity potential of the Bavarian enterprises, research centres and universities. With activities in the areas of embedded systems, IT services and mobile applications, BICCnet supports the Bavarian IT-companies in the implementation of marketable and market-oriented innovations. As the official cluster it is initiated by the Bavarian State Ministry for Economic Affairs and Media, Energy and Technology.
Another important network in the region is the “VDMA, Forum Industrie 4.0”. With its 3,200 members, it is the largest network organisation of its type and represents an important mouthpiece for mechanical engineering in Germany and Europe.

Complete Regional Profile

Economy

Research, Development & Innovation

Latest Regional Innovation Scoreboard results

Governance

Policy

Innovation policies in Bavaria are designed at three levels:

At the European level, the ERDF/ESF 2014-2020 OP and the Regional Innovation Smart Specialisation Strategy (RIS3);
In 2014, the Federal Cabinet adopted a new German High-tech Strategy entitled "Innovation for Germany". The Federal Government and the Länder consult with each other in describing and presenting the various relevant programmes and measures;
At the regional level, the strategy towards social, economic and technical development is described in one major strategic document (Gesamtkonzept für die Forschungs-, Technologieund Innovationspolitik der Bayerischen Staatsregierung).

Life sciences, especially biotechnology and system biology;
Information and communication technologies;
Efficient production technologies, mechatronics, automation and robotics;
New materials, intelligent materials, nano-and microtechnology;
Clean Tech – resources preserving energy-, transport- and environmental technologies, renewable resources (i.e. biofuels), e-mobility; and
Innovative, technology-based services.

Strengthen public awareness of science and research;
Optimise conditions for research and technology;
Boost competitiveness and growth of businesses at all levels;
Align instruments of research, technology and innovation policy regionally balanced;
Strengthen Bavaria in the competition of EU and federal funds; and
Identify main issues of research and technology policy.

Activities linked with Advanced Manufacturing

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Support Measures

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Policy Documents

Organisations

European Commission - Internal Market, Industry, Entrepreneurship and SMEs

Bavaria

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Economy

Research, Development & Innovation

Latest Regional Innovation Scoreboard results

Governance

Policy

Activities linked with Advanced Manufacturing

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