According to a new study by the Institute of the German Economy (IW), which was reported by Spiegel, Bavaria appears to be maintaining its economic strength when compared nationally. However, the regional economic landscape shows deep disparities, with not all Southern German areas able to keep pace.
IW researcher Hanno Kempermann noted that while Baden-Württemberg is falling behind in the decades-long “race for prosperity” in Germany, Bavaria is well-positioned due to its broad base in sectors like aviation, medical technology, and professional services. Conversely, Baden-Württemberg reportedly faces widespread difficulties in the automotive, mechanical engineering, and metal goods industries.
These trends become clear when observing the regions’ long-term rankings, which are published every two years. While Baden-Württemberg has seen its number of locations in the Top 100 shrink to 19 compared to 30 in 2016, Bavaria has managed to expand its dominance, now representing 58 such regions.
Kempermann, alongside Vanessa Hünnemeyer and Johannes Ewald, analyzed the economic status and prospects for all 400 districts and independent cities across Germany. To determine a region’s success, the researchers compiled 14 indicators across three main areas: economic structure, labor market, and quality of life. The evaluation gave greater weight to factors such as municipal tax capacity than to the mere presence of natural green spaces. The scope of the study also includes demographic factors like aging populations, doctor density, local female employment rates, and private levels of over-indebtedness.
In the overall rankings, highly dominant areas include the Rhein-Main region, powered by Germany’s financial center in Frankfurt, alongside the Bavarian areas-especially the greater Munich area. The IW attributes the success of the Rhein-Main region to its robust job market and powerful economic output. Conversely, among the weakest regions are several cities in the Ruhr Area, as well as the Thuringian city of Suhl.
The second part of the report focuses on economic dynamics, spotlighting considerable progress in cities previously deemed weaker. For example, Cottbus in Brandenburg benefits from the maintenance work of Deutsche Bahn and the establishment of the Medical University Lausitz. Furthermore, Neumünster in Schleswig-Holstein reported a significant decrease in registered criminal offenses. The researchers highlight that innovative ecosystems-which connect regional science, economy, and start-up companies-provide a critical advantage in these areas.
