The German economy, along with the nation's self-esteem, has been staging a recovery of late after a long period of stagnation. Science seems to be enjoying a parallel renaissance. But structural changes are essential if the country's research system is to remain internationally competitive.

Science has long held a prominent place in German society. However, its institutions and practitioners have sometimes been slow to adapt to changing circumstances — notably the rapid emergence of biotechnology and molecular medicine, the increased internationalization of science, and the desire of many scientists to be involved in the commercialization of their work.

Nonetheless, the German government has continued to steadily increase its investment in science. Germany has benefited immensely from an influx of scientific talent from central and eastern Europe. And efforts have been undertaken to reverse the brain drain of scientists from Germany, with several initiatives aimed at bringing researchers home from the United States.

The main concern is the weakness of Germany's top universities relative to their rivals abroad. Germany's rigid federal structure and its tendency to treat all its universities on an equal basis have contributed to a situation in which no German research university has established itself in the top global tier. According to a survey by the Shanghai Jiao Tong University, for example, no German university is among the world's top 50.

The government has responded to this challenge with an 'excellence initiative' that will reward universities with particularly convincing concepts in collaborative research and postgraduate training. The first winners were announced on 13 October, and the outcome disproves fears that political considerations might have influenced the selection.

But even if the initiative succeeds on its own terms, it will not in itself provide sufficient resources to propel the winners into the top tier of global universities. Nor will it remove the structural problems, such as the bickering between the states and the federal government over science and education, that prevent German universities from playing to their strengths.

Nonetheless, the initiative shows that Angela Merkel's coalition government is aware of the need for university reform. At the very least, it gives a handful of universities, institutes and research groups the opportunity to showcase their strengths, and provides a tidy sum of money to improve their standing further.

Additionally, the competition has forced every university to think hard about its strengths and weaknesses. For winners and losers alike, this will help them nurture promising areas of research and develop necessary collaborations across disciplines. It has injected a palpable spirit of optimism, and a healthy extra shot of competition, into the research system.

The selection of the winners on 13 October nearly became a spectacular failure when some politicians, who felt ignored by the scientific jury, allegedly threatened to call the whole thing off. In the end only three universities made the cut — the Ludwig Maximilians University Munich, the Technical University of Munich and the Technical University of Karlsruhe — rather than the expected five. But the fact that some departments in less prominent universities, such as Würzburg or Bremen, gave the winners a run for their money should be an incentive to those who lost out this time to sharpen their research profiles.

Germany's coalition government and those of its 16 states must continue to coordinate their efforts to develop the universities. There are strong indications on the ground that the dominance of the traditional, all-powerful 'Herr Professor' is fading on German campuses, to be replaced by younger laboratory chiefs with a more progressive outlook on how science should be done. That, too, augers well for the future of science at German universities.