Germany Ill-Prepared for AI Boom
According to the ifo Institute, Germany lacks key prerequisites to exploit the growth potential of artificial intelligence.
That’s according to the findings of an analysis on behalf of the Chamber of Industry and Commerce for Munich and Upper Bavaria, which will be published shortly. “The high-tech industry is still too small, digitalization of public administration has made too little progress, and the education system is not adapting fast enough to the changes brought about by AI,” says Oliver Falck, Director of the ifo Center for Economics of Innovation and Digital Transformation.
The ICT sector (information and communication technologies) contributes only 4.6 percent to gross value added in Germany. That places the share in the lower middle field among EU countries. In 2025, Germany imported USD 11 billion more in ICT services than it exported. “No other EU country is more reliant on foreign countries in the field of information and communication technology than Germany,” says ifo researcher Christian Pfaffl.
According to analyses by the ifo Institute, there has been hardly any progress in the digitalization of public administration – even though this is precisely where better services could be offered to citizens and companies with the help of AI and the extensive administrative data already available. For instance, Germany is still in the experimental phase when it comes to providing pre-filled forms, while this has long since been widely implemented in neighboring countries such as the Netherlands, Denmark, Poland, and Austria.
The ifo researchers see another problem in the education sector: When it comes to skills above the basic level, Germany is below the EU average. 40 percent of eighth graders fail to reach level 2 in computer and information literacy. “AI applications are spreading rapidly, but too many people lack the knowledge to make productive use of them,” says Falck. A lack of expertise is the most common reason why companies fail to implement planned AI projects.
Note: Detailed analyses will be published in late November in the study (in German) “Benchmarking Digitalization 2026” (Benchmarking Digitalisierung 2026), published by the ifo Institute on behalf of the Chamber of Industry and Commerce for Munich and Upper Bavaria.
