The Berlin innovation ecosystem is characterized by its highly developed research landscape. Berlin boasts a high density of universities—and their graduates—and numerous well-developed and publicly financed research institutions. At the same time, a lack of large research-active companies and a weakly developed SME sector are major deficits in Berlin’s innovation ecosystem. These shortcomings result in weak privately financed R&D, the pronounced small-scale nature of Berlin’s economy, and rather low patent performance.
What sets Berlin apart as an innovation ecosystem in Germany and throughout Europe is the vibrant startup scene that has developed since the 2000s. Interestingly, the Berlin startup boom is not the result of exceptionally favorable political and administrative conditions or ambitious support programs, but rather of social and cultural factors.
Innovative startups that align with Berlin’s strength in publicly financed R&D generate positive long-term effects: They encourage large, well-established companies to invest in the city. These investments are no longer merely incubators and showrooms but, increasingly, R&D centers and—like in Tesla’s case—production facilities. Thus, science and innovation are making a decisive contribution to turning a poor and structurally weak city back into an attractive location for business and industry.