Berlin Leads Germany in Innovation and Growth—Again
High startup density and skilled workforce keep Berlin ahead, while employment grew 67% since 2005 compared to national 33% average.
Berlin has once again claimed the top spot in Germany's innovation landscape, marking an impressive 11th consecutive year as the country's most innovative federal state according to the ING Germany Innovation Index 2025. The capital's sustained leadership position underscores its role as the nation's undisputed innovation hub, driven by a combination of demographic advantages and a thriving startup ecosystem.
The ING Innovation Index, compiled annually by ING’s economists, evaluates Germany’s 16 federal states across eight key indicators:
- Youth Potential - Ratio of employees under 50 to those over 50
- Higher Education - Share of employees with tertiary education
- Entrepreneurial Dynamics - Ratio of business openings to closures
- Workforce Flexibility - Share of freelancers in the labor market
- Patent Applications - Indicator of technological innovation
- High-Tech Employment- Jobs in science and tech sectors
- Internet Access - Availability of fast broadband
- Startup Density - Startups per 1,000 inhabitants
The Capital's Winning Formula
Berlin remains the undisputed leader in terms of innovative strength for well-known reasons: demographic change is less advanced here than in the rest of the country. Berlin still has four times as many young residents as older ones, whereas the ratio across Germany as a whole is around three to one. This demographic advantage gives Berlin a significant advantage in terms of innovation capacity.
The city's educational profile further strengthens its position. More than 45 per cent of Berlin's workforce has a tertiary education qualification, compared to a national average of just over one-third. This concentration of highly educated workers creates an ideal environment for innovation and knowledge transfer.
Perhaps most notably, Berlin has more start-ups than any other city in Germany, cementing its reputation as the country's start-up capital. This entrepreneurial density fosters a dynamic ecosystem in which ideas can flourish and grow.
Innovation Pays Off in Employment Growth
The correlation between innovation strength and economic prosperity is clearly visible in employment statistics. Between 2005 and 2024, employment in Germany grew by around 33 percent overall. However, there are significant regional differences. In innovation champion Berlin, employment grew at an above-average rate of 67 percent during the same period.
This remarkable employment growth of 67% - more than double the national average - demonstrates how innovation translates directly into job creation and economic opportunity. The data reinforces Berlin's position not just as an innovation leader, but as a job creation powerhouse.
This positive development is, of course, also reflected in economic growth. Berlin has consistently ranked at the top of the GDP charts for many years, well above the national average.
Although, unlike London or Paris, Berlin was not a major economic center for a long time due to its specific historical development, the city has experienced particularly dynamic growth since reunification. It now has an internationally significant economy characterized by its youth and technology focus.
Another recent study by Adobe, which compares cities rather than federal states, also puts Berlin in first place, well ahead of Munich. The decisive factors here were the high number of start-ups and tech jobs.
Looking Forward: Structural Change Required
Although Berlin's continued dominance is impressive, the report suggests that maintaining an innovative edge requires more than government investment alone. The link between public investment and international competitiveness remains weak. In recent years, countries with significant venture capital and a high number of start-ups have tended to rank highly in international rankings.
This highlights the importance of venture capital and entrepreneurial ecosystems — areas in which Berlin already excels. The capital's combination of start-up density, venture capital availability and an educated workforce positions it well for continued innovation leadership.
Berlin's Business Advantage
For businesses considering Germany as a location, Berlin's track record speaks volumes. Eleven consecutive years at the top of the innovation index, combined with employment growth that doubles the national average, make a compelling case for the capital as a business destination.
The city's young demographic profile ensures a sustainable talent pipeline, while its startup ecosystem provides opportunities for collaboration, innovation, and growth. As Germany's innovation landscape continues to evolve, Berlin remains the clear frontrunner in combining the key ingredients for sustained innovation success: talent, infrastructure, entrepreneurship, and opportunity.
The 2025 ING Innovation Index confirms what many in the business community already know - when it comes to innovation in Germany, Berlin continues to set the pace.
Thinking about launching a business, setting up premises, or creating partnerships in Berlin?
We invite you to contact us.
Our team is ready to help you with our free consultation services.