According to an analysis by the Ifo Institute, commissioned by the Chamber of Industry and Commerce for Munich and Upper Bavaria, Germany currently lacks important preconditions necessary to leverage the full growth potential of Artificial Intelligence. The findings of this study are slated for release shortly. Oliver Falck, head of the Ifo Center for Innovation Economics and Digital Transformation, stated that the country’s high-tech industry is insufficiently large, public administration is not digitized enough, and the education system is not adapting quickly enough to the changes brought about by AI.
The current contribution of the ICT (Information and Communication Technologies) sector to Germany’s gross value added is only 4.6 percent, placing it in the lower-mid tier of the EU. Furthermore, in 2025, Germany imported ICT services worth $11 billion more than it exported. Ifo researcher Christian Pfaffl highlighted this dependency by saying, “No other EU country is more reliant on foreign imports in the area of information and communication technologies than Germany.”
The institute’s analysis also points to minimal progress in the digitalization of public administration. This is despite the potential for government bodies to offer better services to citizens and businesses using KI (AI) and the vast amounts of existing administrative data. For example, while Germany is still only in the experimental phase regarding the provision of pre-filled forms, neighboring countries such as the Netherlands, Denmark, Poland, and Austria have implemented this functionality largely.
Another critical issue identified by the Ifo researchers is in education. In terms of competencies beyond the basic standard, Germany falls below the EU average. Specifically, 40 percent of eighth-grade students do not reach Level 2 in computer and information literacy. Falck explained that “AI applications are spreading rapidly, but too many people lack the knowledge to use them productively.” A lack of specialized expertise is reported as the most common reason why companies fail to implement planned AI projects.
