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Economic Development in Berlin

The economic situation in Berlin, both East and West, has been transformed substantially since the collapse of the Berlin wall ten years ago. As a result of the "artificial", subsidised development of the "two Berlins" during the post-war period the unified city is relatively provincial in terms of its economic status. This is the case whether one compares Berlin with other capital cities or the large cities in the former West Germany which were the preferred locations for major national and international business investment. During the cold war West Berlin's economy and its cultural and social institutions needed to be propped up by the federal government because of the lack of interest on the part of the private economy. Furthermore, this half of the city was turned into a "shop window to the west" for political reasons. East Berlin was equally heavily subsidised and artificially/politically developed in order to be a showcase socialist capital city. As a legacy of the two opposing systems the city did not have a well-developed economic infrastructure.This situation has been improving dramatically since the fall of the wall as a result of significant institutional investment, a vibrant informal infrastructure and an abundance of creativity and innovation among small and micro businesses. Berlin has a long-standing appeal across the world for its special situation, history, and the combination of alternative culture and world city flair. This has now led to an increasing number of firms locating in Berlin. At one end of the spectrum, major multinationals such as Sony have set up on and around Potsdamer Platz, a space symbolising post-industrial and global economy, while at the other end of the spectrum there exists an acknowledgement, a promotion even, of small and micro businesses in the technology, media, services and cultural sectors.

Poor Performance but an Optimistic Outlook

During 1998 Berlin recorded an economic decline of 0.3%, compared with the growth figure of 2.8% for Germany as a whole for the same year, and was thus the Land with the worst economic performance. The unemployment rate of 16% (compared with 11% for Germany) is equally unimpressive. Nevertheless, there is significant optimism that the city has passed its lowest point in economic performance. According to the Senator for Economics, Wolfgang Branoner, the main targets of economic policy are to promote:
  • small and medium firms, which make up the vast majority of the city's economy
  • modernisation of the economic infrastructure to enhance competitiveness through investment
  • innovation, especially in the sectors of the future - information technology, media, transportation technology, bio-/medical technology
  • the acquisition of international investment to consolidate Berlin as an economic location
  • business start-ups to enhance the city's entrepreneurial potential
  • the exploitation of east-west cooperation

    A Blossoming Post Industrial Economy

    The largest part of Berlin's gross domestic product is generated by private service sector firms (40.4% in 1998). Most of these are small and medium firms with between one and 50 people involved. Each year thousands of new firms are set up (39,000 registered in 1998) but almost as many fold each year (36,405 de-registered in 1998). In 1996 the Senate Department of Economy and Technology launched a programme based on information, advice and incentives to promote this sector. The programme particularly targets young people and those working in the technology and media sectors. It establishes a network of institutions and advice centres across the city and includes a yearly event called "Existenzgründertage" 2000, (see: ). Regular seminars on the themes of "Existenzgründung" (business start-up), a handbook "Berliner Gründungsführer" and a new brochure called "Selbstständig! Chancen in Berlin" (Self-employed! Chances in Berlin) are also available. In addition, the Senate has two special agencies dealing with the promotion of small firms - Investorenleitstelle and Wirtschaftsförderungsgesellschaft.

    In order to promote Berlin as a desirable commercial location, as well as to promote innovation, the city has developed a number of large-scale projects and initiatives together with innovative technological business. The main ones are TSB Technologiestiftung Innovationszentrum Berlin, RITTS-Projekt Berlin, Technologie-Coaching Center, BioTOP Berlin-Brandenburg, Mobilität und Verkehr Berlin-Brandenburg, and MediaCity Adlershof. The latter, located on the premises of the former Academy of Sciences and GDR television production facility, is a technology park combining research/university departments and industry in the "new" technologies.

    Regarding information and communication technologies Berlin has another location advantage: because all the telephone cables had to be renewed after reunification to make them compatible for a single city, Berlin is the best networked and digitalised city in Gemany. This fact has led to spin-off initiatives and developments that combine culture and different sectors of the economy. Some of these are geared directly towards further promotion of the city, such as "Projekt Zukunft - Der Berliner Weg in die Informationsgesellschaft" (Project Future - Berlin's way into the information society), MediaWeb Berlin, digital audio broadcasting experiments, "Stadtinformationssystem", and "CidS! - Computer in die Schulen" (Computers into schools). This sector is closely linked with another key sector - media - and as a result of the city's positive developments in this field, one of the major media firms, SAT1 has located their national HQ in Berlin. Although this does still not bring Berlin's position anywhere near that of Köln/Cologne or München/Munich (the TV and film capitals of Germany), the basis for future growth has been set.

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