According to the Munich-based Ifo Institute, Germany is poorly prepared for the AI boom. In a statement released on Monday—ahead of the government’s Digital Summit—the institute explained that key prerequisites for harnessing the growth potential of artificial intelligence (AI) are currently lacking. It noted that the high-tech sector remains too small, public administration is insufficiently digitized, and the education system is not adapting quickly enough to the changes brought about by AI.
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According to the Ifo Institute, the ICT (information and communication technology) sector contributes only 4.6 percent to Germany’s gross value added—a figure that places it in the lower-middle range within the EU. In 2025, Germany’s imports of ICT services exceeded its exports by 11 billion US dollars. “No other EU country is more dependent on foreign sources in the field of information and communication technology than Germany,” stated Ifo researcher Christian Pfaffl.
The Ifo Institute has criticized the lack of progress in the digitalization of public administration. Yet, by leveraging AI and the vast amounts of administrative data already available, the public sector could offer better services to both citizens and businesses. For instance, Germany is still in the experimental phase when it comes to providing pre-filled forms—a service that has long been widely implemented in neighboring countries such as the Netherlands, Denmark, Poland, and Austria.
The Ifo Institute also identifies a problem in the education sector: Germany falls below the EU average in terms of skills that go beyond a basic level. Forty 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 use them productively,” explained Oliver Falck, head of the Ifo Center for Innovation Economics and Digital Transformation. A lack of specialized expertise is the most common reason why companies fail to implement planned AI projects.
According to the Ifo Institute, its findings are based on an analysis commissioned by the Chamber of Industry and Commerce for Munich and Upper Bavaria, which is set to be published shortly.
Author: AFP – ilo/mm – Translated by Blackout News
Sources: AFP Press Portal