IMF demands: More research instead of subsidies!

IMF demands: More research instead of subsidies!

The International Monetary Fund (IMF) has called on Germany to invest more in research as current economic policies are not sufficient to stimulate economic growth. According to the IMF, governments should adopt a broader range of policies to promote innovation, including public funding for basic research, R&D subsidies for innovative start-ups and tax incentives for applied innovation. An increase in spending on basic research by about 0.5 percentage points could increase gross domestic product by two percent per year and reduce a country's debt ratio.

Criticism was also expressed about the current research funding. Era Dabla-Norris, deputy director of the IMF's fiscal affairs department, complained that governments have turned away from funding public research and development and have almost tripled subsidies for private research without achieving a boost in productivity. According to the IMF, the focus on subsidies and tax relief not only leads to special interests being represented, but also to resources being directed to the wrong areas.

A meeting between Chancellor Olaf Scholz and German business leaders emphasized that Germany is too focused on subsidies and taxes and that increased research could lead to sustainable growth. However, the business representatives' ten-point plan did not include any explicit measures to promote research, which was criticized by the IMF as a lack of consideration of important aspects.