Regional differences in digitalization in Germany - what are the possible causes?

Picture of Oliver Foitzik

Oliver Foitzik

May 13, 2022

The Digitalization Index 2021 shows that the regions of Germany have different statuses in terms of digitalization and have also made different progress. While the Southern federal state group with Bavaria and Baden-Württemberg continues to occupy the top position, the Eastern federal state group with Thuringia, Saxony, Saxony-Anhalt, Mecklenburg-Western Pomerania, Brandenburg and Berlin continues to bring up the rear. What are the reasons for these regional differences?

Aspects of digitization

The Digitization index examines the varying degrees of progress of digitalization in the individual sectors and regions in Germany and will be published once a year in future. It will focus on the following aspects

  • Processes
  • Business models
  • Research and innovation activities
  • Products
  • Qualification
  • Innovation landscape
  • Technical infrastructure
  • Society
  • Human capital

The digitalization index thus captures internal company characteristics (processes, business models, products, research and innovation activities) on the one hand and the framework conditions (qualification, innovation landscape, technical infrastructure) on the other. Both together have an influence on the level of digital maturity.

The frequently stated Digitalization boost due to the corona pandemic At best, the index was able to identify a decrease in the "Processes" category; however, the results varied greatly depending on the sector.

Digitization index: the regional differences

In addition to different sector results, there are also regional differences in terms of digitalization.

Leader South - where do Bavaria and Baden-Württemberg perform particularly well?

The two southern German states are the unchanged leaders when it comes to digitalization. They were also able to further expand this position in 2021 - both in terms of the digital maturity of companies and in terms of the framework conditions. The technical infrastructure in particular has improved significantly over the past year. In addition, there has been extraordinary activity in terms of research and innovation within companies. The two federal states with a strong industrial focus (automotive industry, mechanical engineering) have thus made great strides forward.

Federal state group West in second place

The western federal states of Hesse, North Rhine-Westphalia, Rhineland-Palatinate and Saarland are also making a leap forward - but not as big a leap as the southern states. The expansion of technical infrastructure in particular, as well as processes and products, is a major step forward. However, there is a need to catch up when it comes to innovation and the associated innovation landscape.

Strong technical infrastructure in the north

Despite low population density and urban sprawl, northern Germany can boast a particularly good technical infrastructure, which was further expanded last year. Similar to the west, the result for research and innovation activities is also below average here; however, the innovation landscape performs slightly better. Business models, society and human capital are areas in which the north can certainly compete with the other federal states.

Bottom of the league East

The east only achieved average to above-average scores in three areas: products, technical infrastructure and innovation landscape. In all other areas of digitalization, the eastern federal states of Thuringia, Saxony, Saxony-Anhalt, Mecklenburg-Western Pomerania, Brandenburg and Berlin lag behind the other federal states. At just 4.1 percentage points, the overall increase in the digitalization index is also lower than in the other federal states, which all achieved increases of between 15 and almost 18 percentage points.

Possible causes for the regional differences

The Digitalization Index 2021 does not make any statements about the causes of regional differences. However, some plausible hypotheses can be derived from the data it provides.

Financial resources

Digitalization is primarily a financial issue. Although the technical infrastructure has been expanded in all regions, serious differences remain - particularly between the rich south, which is leading the way, and the financially under-resourced east, which continues to bring up the rear.

Digital mindset

It also appears that digitalization is increasing exponentially: The South, which is already in the best position, has also seen the strongest growth in digitalization overall. So once the kick-off has been achieved, the speed of digitalization continues to increase. This could be due to the corresponding mindset: Digitalization is also known to be largely a matter of attitude. Once this mindset is present among those responsible in politics and companies, they will continue to drive digitalization forward.

Innovation is crucial

A comparison of the federal state groups shows that the South is the only federal state group to achieve above-average values for research and innovation activities. At the same time, research and innovation activities are also the value in which the South performs best of all aspects. Due to this high level of activity with very good results, the South, as an industrially dominated region, is able to take the top spot in terms of digitalization.

To Dos in terms of digitalization

Of course, these hypotheses are just assumptions that need to be scientifically investigated. However, the data shows that the assumptions made are entirely plausible. Overall, both companies and the state should probably invest in innovation and a fertile innovation landscape in the future in order to drive digitalization forward.

Source cover image: © | Adobe Stock

About the author

Picture of Oliver Foitzik

Oliver Foitzik

Oliver Foitzik has been a TCI partner since 2009 and is responsible for business development. As a senior consultant, his focus is on issues relating to strategy, organization, processes and IT. He is also an expert in communication and new media.

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