Patents, exports and technological specialization at the state level in Germany

Abstract

Germany is a highly innovative country with large regional differences, both in economic performance and innovation potential. This paper focuses on the knowledge production and technological specialization at the state level in Germany and how it affects the exports of individual states. We measured the technological specialization based on average relatedness between patent classes. We demonstrated that technological specialization increased between 1988–1992 and 1998–2002 in most German states, whereas between 2008 and 2012 it slightly declined or remained stable in all states except Saarland and Bremen. Highly innovative states, such as Bayern, as well as the least innovative Sachsen-Anhalt, belong among the most specialized states. Therefore, there is no obvious trend indicating that large specialization is related to higher innovativeness or vice versa. In accordance with other studies, we found that having a higher number of patent applications increases exports. This is especially valid at the state level. However, within the seven examined industrial categories, the relationship is weaker. Apart from patenting, we also estimated other R&D indicators such as Gross Domestic Expenditure on Research and Development (GERD), R&D personnel and technological specialization. Whilst the higher relative numbers of R&D personnel increase the volume of exports relative to regional GDP, in the case of GERD, the results were inconclusive. Furthermore, a higher technological specialization measured by average relatedness between patent classes negatively affects exports. This finding is surprising, and other measures of specialization in different regions should be tested to support it.