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Building Back Better – Regional Economic Development after the Crisis

Steinbeis experts conduct survey on the perceived strengths and weaknesses of municipal economic development activities

The coronavirus and government measures to contain the pandemic were followed by a sharp decline in economic activity. Depending on how to measure it, it was the worst economic downturn since World War II. Regional development agencies – a key instrument of municipal economic policy – face unique challenges as a result of this crisis. The Steinbeis Transfer Center for European Policy and Sentiment Analysis has conducted a study on public attitudes towards regional development agencies, both during and after the crisis, as well as people’s opinions on the work carried out by the agencies. In April, the Steinbeis experts joined forces with opinion research institute Civey to survey more than 5,000 respondents in Germany on their perception of the role played by local development agencies.

To conduct the online survey, the kind of selection bias usually encountered in internet samples was compensated for by using complex weighting and quota methods (post-stratified quota sampling). This was to ensure results can be considered representative of the voting population in Germany, based on a sampling error of less than 3%. The results raised an eyebrow or two.

Study highlights major regional differences

The first noticeable finding of the study is that there are major regional differences in responses regarding the impact of the coronavirus pandemic on the economy. In all areas of Germany, just under half of the respondents believed the local economy has been very strongly or somewhat strongly impacted. Scores were particularly strong in eastern Germany and the Ruhr, although they were also high in parts of Bavaria with weak infrastructure and in border areas. This contrasted with rural parts of Baden-Wuerttemberg or even Lower Saxony, where economic impacts were considered less severe.

There were differences in interviewee responses regarding long-term, structural changes and the short-term impacts of the pandemic. For example, when asked how the local economy fared over the past three years compared to surrounding areas, the region to the west of Berlin stood out, with a majority of respondents feeling that the region performed comparatively well in economic terms. This contrasted with respondents who felt the economy fared worse than in surrounding areas, particularly in parts of the Ruhr, vacation areas in northern Mecklenburg-West Pomerania, the Palatinate Forest, and southern Saxony-Anhalt.

The majority of respondents believed that government development agencies play an important role in supporting the local economy. Roughly 43% agreed with this statement, with only 19% disagreeing. There were major regional differences in responses, however. In some regions, around 60% of respondents felt that economic development plays an important role in supporting local business (such as Emden and the district of Friesland), compared to less than 30% in places like Wolfsburg or Wurzburg.

Little knowledge about regional  development activities

Ask about the concrete instruments used by municipal economic development agencies in carrying out their work, however, and there is general ignorance. According to their own statements, the majority of respondents knew very little about the tasks and specific activities of economic development. In response to the question – “In which areas is regional economic development particularly active?” – nearly two-thirds of respondents answered, “Don’t know.” Again, the most surprising finding was the large range of variance between districts (from under 40% to over 80%).

The respondents were then asked in which of eight areas municipal development is considered to be particularly active, or where the most improvement would probably be needed. As far as the respondents were concerned, regional development agencies performed particularly well when it comes to managing industrial zones, promoting tourism, and regional marketing. This contrasted to areas in which it was felt there is particular potential to improve, such as expanding supply networks, promoting start-ups, and providing training and continuing education. There were also major differences between districts in these areas. For example, in the district of Garmisch-Partenkirchen, just under 40% of respondents felt positive about the promotion of tourism through the local development agency. Asked about expansion in supply networks in Lüchow-Dannenberg, respondents said there was a particularly strong need to make improvements.

After what has been a long pandemic until now, the respondents felt that the primary role of economic development is to support local businesses that are already established, rather than pull in new companies. One area where municipal development agencies should therefore do their homework will be in supporting companies particularly badly affected by the pandemic in key areas identified by the survey. The Steinbeis Transfer Center for European Policy and Sentiment Analysis supports local economic development agencies by conducting custom-designed assessments of key regional factors, not only by evaluating specific areas of industry but also by offering scientific consulting aimed at ensuring communities quickly succeed in regaining their bearings after the pandemic.


Prof. Dr. Oliver Serfling (author)
Steinbeis Entrepreneur
Steinbeis Transfer Center for European Policy and Sentiment Analysis (Frankfurt)

Prof. Dr. Jakob Lempp (author)
Steinbeis Entrepreneur
Steinbeis Transfer Center for European Policy and Sentiment Analysis (Frankfurt)