Bavaria has become one of the most important research centres in Europe. Three major research institutions operate in the Free State: the Max Planck Institute for Plasma Physics in Garching, the Research Centre for Environment and Health in Neuherberg, and the German Aerospace Research Institutes in Oberpfaffenhofen. Fourteen institutes and other departments of the Max Planck Society and nine departments of the Fraunhofer Institute for the Promotion of Applied Research are based in Bavaria. The Free State also maintains, alone or with other German states, a number of research establishments such as the Ifo Institute for Economic Research.
        Special attention is directed in Bavaria to fostering cooperation between universities and industry. The Free State has launched various programs to encourage such cooperation in the research on materials and microsystems. A comprehensive infrastructure for research in electronics has also been set up around the Erlangen and Munich-based units of the Fraunhofer Institute. These particular areas of technology are of paramount importance for maintaining many a sector of Bavarian economy competitive. A new unconventional mechanism to provide technological support to Bavarian economy was established with the inauguration of the Bavarian Research Foundation in 1991. It fosters a number of research institutions, e.g. for artificial intelligence, high-temp conductors, catalysis, biotechnology and genetics, all of which set an example for close interaction between science and industry.
        The innovation centres in Erlangen, Munich and Würzburg, as well as the prospective Middle Franconia (Mittelfranken) Technology Park at Nuremberg also upholds the launch of new businesses employing innovative technologies. High-risk research and development projects carried out by small and medium-sized companies in any sector are entitled to state sponsorship under the Bavarian Programme for Technologic Assistance.

        As part of the "Initiative Bavaria's Future" 2.86 billion euros, realized from the divestment of the state's holdings, was reinvested in support of education, research, technology transfer, start-ups and strengthening foreign economic policies. In addition the Bavarian government has launched a 1.35-billion euro "High-Tech Initiative" to reinforce Bavaria's leading position in life sciences, information and communications, new materials, environmental and medical technologies as well as mechatronics.
        Bavaria's investments in the science and research sector reach an extremely high level compared with the rest of Germany: In 1996 they amounted to 2.7 billion euros, so that Bavaria came before Baden-Württemberg (2.4 billion euros) and behind Nordrhine-Westphalia (3.2 billion euros), which has a much higher population. And it left the other states even further behind.
For the past years Bavaria's infrastructure expenditures increased to above average. With an increase of the funds available of 34 % between 1991 and 1996, Bavaria outperforms all the other states.