Foreign-born workers keep German economic engine running

Germany’s economic growth and innovation is helped greatly by its openness to welcome foreign-born citizens, according to a study by Movinga.

The online removals platform undertook research into each of Germany’s 16 federal states, analysing the number of firms receiving venture capital, the number of patent applications, the unemployment rate and the percentage of the state’s inhabitants born in another country.

The findings show that German states with a higher percentage of foreign-born citizens see higher levels of innovation and that attracting more people from other countries does not mean higher unemployment.

In analysing the possible benefits of foreign human capital, the diagrams compare key indicators on innovation and economic prosperity – firms accepting venture capital; patent applications; unemployment – with the percentage of the population born outside Germany.

Europe’s key economy

With 81.4m citizens, Germany is Europe’s largest country by population and also has the largest foreign-born population, with more than 7.8m (9.6%) originating from another country. However, this diversity is not evenly spread across Germany’s 16 federal states: five states have more than 10% of citizens who are foreign-born, while five have a foreign-born population of less than 3%. This disparity is illustrated in Figure 1.

Figure 1 – Distribution of foreign-born workers in Germany – Immigration rate (%)

This graphic shows the differing levels of diversity in Germany’s 16 federal states, with darker shading indicating a higher percentage of foreign-born citizens. Berlin is the state that has the highest percentage of residents who are foreign-born.

Figure 2 – Number of companies raising venture capital

This graphic shows the numbers of firms receiving venture capital in each state, with darker shading indicating a higher number of companies raising capital. Berlin is also the state with the highest number of firms receiving venture capital.

Figure 2 shows that city states such as Berlin and Hamburg that have a higher percentage of foreign-born citizens are also home to a higher number of firms receiving venture capital. Similarly, Figure 3 displays that the two federal states with the most patent applications – Bayern and Baden-Württemberg – are also diverse demographically, with around 10% of their populations being foreign-born.

Figures 1, 2 and 3 also show that federal states with fewer firms receiving venture capital and lower numbers of patent applications – such as Sachsen-Anhalt and Mecklenburg-Vorpommern – have smaller foreign-born populations.

These findings convey that people born outside Germany are of great economic value, and that an attitude of openness to foreign-born citizens is important in supporting innovation, research, development and growth. The relative weakness of the federal states with fewer numbers of people born in other countries suggests that they could boost innovation and their general economic performance through attracting more talent born outside Germany.

Figure 3 below shows Bayern and Baden-Württemberg also have some of Germany’s lowest unemployment rates, whereas Sachsen-Anhalt and Mecklenburg-Vorpommern have some of the highest unemployment rates. This shows that having a higher number of foreign-born citizens doesn’t mean that fewer people will be able to find jobs. While unemployment is higher in the diverse states of Berlin and Hamburg compared to the national average, this is more indicative of their unusual positions as city states rather than their economic weakness.

Figure 3

“The impressive amount of firms accepting venture capital and the number of patent applications in the diverse regions of Berlin, Bayern and Baden-Württemberg suggests that foreign human capital helps support innovation and growth,” sayd Movinga’s managing director (MD) Finn Age Hänsel.

Further insights
Among the study’s other findings:

  • There are more patent applications in Baden-Württemberg than in any other federal state.
  • Bayern ranks second for firms receiving venture capital and patent applications.
  • Bayern is also the state with the lowest unemployment rate.
  • Bremen has the highest unemployment rate of the 16 federal states.
  • Thuringen is the federal state with the lowest percentage of citizens who are foreign-born.

Data used for the report was provided by The Organisation for Economic Co-operation and Development (OECD) and the German Federal Statistical Office (Destatis).

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