Abstract
The Munich case study examined in this chapter highlights the development path and special features of the economic transition to knowledge-intensive and creative services in the city and its region. The latter is characterised as a polycentric area with an increasing interdependence between the traditional core and the smaller towns surrounding it. An attempt is made to show how these new economic centres have been developed through a singular interplay of different production sectors, a well-integrated transport system and economic policy strategies featuring clusters of highly innovative firms that have helped to prevent territorial imbalances and disparities in relation to employment and household income. Particular attention is paid to investigating how, within this framework, the location choices of knowledge-creating services have been exercised. The study also highlights how aggressive economic promotion of the city has contributed to exacerbating competition for space between economic activities and the emerging urban elite, giving rise to both a marked increase in housing market prices and social inequalities. The capacity of local government to mitigate these processes, to foster economic development and shape urban policies focused upon place regeneration and the recapitalization of the city is examined by considering Munich’s peculiar institutional thickness and its integrated development strategy based on socially equitable land-use.
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Notes
- 1.
In the 2010 edition of the Global and World Cities Research Network (GaWC), Munich is rated as an “alfa-city”—the second in Germany after Frankfurt—in terms of its connectivity, i.e. its level of interaction within the network of global cities. If we consider that the Mega-City Region of Munich, which includes the eight secondary urban centres that surround Munich itself, and if we examine the intensity of intrafirm connectivity of advanced producer service firms, it is clear why the city of Munich has established itself as “a central node and international gateway for smaller centres in the emerging mega-city region and acts as an important international knowledge-hub” (see Lüthi, Thierstein, & Goebel, 2010, p. 128).
- 2.
The regional planning association of the Munich region comprises, besides the city of Munich administrative area, the county administrative districts of Dachau, Ebersberg, Erding, Freising, Fürstenfeldbruck, Landsberg am Lech, Munich and Starnberg.
- 3.
The main sources of income for local authorities are business rates, income tax, retail and land use taxes and various local taxes (leisure, park management etc.) which municipalities have introduced to boost their revenues. With the highest investment rate of all German cities (705 € per capita in 2006, compared with Stuttgard 647 €, Dusseldorf 451 € and Frankfurt 383 €), Munich also continues to impose the highest city tax rates.
- 4.
The intense suburbanization process has significantly changed the balance between the city of Munich and its hinterland. While in 1970, 80 % of the regional population lived in the Munich conurbation (and 62 % in the city), in the early 2000s this figure was less than 75 % for the conurbation and 49 % for the city. The location of industrial companies and advanced service activities has proved especially beneficial to the area immediately around Munich, which has grown at an extraordinary rate since the 1990s and which now contains as many as five of the ten richest urban and rural districts in Germany.
- 5.
In the context of the urban region, Freising is the only functional area not to have Munich as the primary city in the connectivity-ranking of the new economic assets, especially in terms of advanced producer services firms (Lüthi et al., 2010).
- 6.
Jean Gottmann was among the first to emphasize the function of this important institution as essential advanced service supporting the economic, urban and demographic development of cities (see Gottmann, 1961).
- 7.
The main reason for the relocation of the Siemens headquarters to Munich was that the company expected that it would not have to pay as much in war reparations in the American sector (Rode et al., 2010).
- 8.
In later years Munich and its immediate hinterland were chosen not only for the administrative headquarters of the Max Planck Society, but also for the Institutes for Intellectual Property and Competition Law, Tax Law and Public Finance, Astrophysics, Extraterrestrial Physics, Plasma Physics and Quantum Optics (a Garching), and Neurobiology (a Martinsried).
- 9.
These included the European Research Center of General Electric and the major research and development facility of Pfizer.
- 10.
In the federal system of Germany, the Länder (states) are largely responsible for policies concerning research and development, university and education, culture and creative-cultural industries. Until the 1960s, Bavaria was an economically backward agrarian state, with unemployment rates well above the German average. Since then, Bavaria has evolved into one of the economically best performing federal states.
- 11.
With the financial support from the Federal government and the State of Bavaria, the first metro stations were opened, the circular motorway around inner city (Mittlerer Ring) was built and a regional railway network was developed.
- 12.
Munich is second only to Frankfurt in the German banking sector and it is the most important city in Europe as regards insurance.
- 13.
Europa—Press Releases—Regional GDP per inhabitant in the EU27, 2009.
- 14.
Over the last decade, Munich has consolidated his position among the top ten “leading cities for business” (European Cities Monitor) and has reached fourth place in the ranking based on assessment of the quality of life (Mercer Consulting) judged by political, social, economic and environmental aspects, and second place among the cities with the best infrastructure.
- 15.
The aerospace sector has become the most important in Germany, with specializations in the emerging satellite navigation industry, and as a classic high-tech research-intensive industry, it is constantly providing other industries and the Munich economic region with significant technological impulses (IHK-LH München-Referat für Arbeit und Wirtschaft, 2007).
- 16.
About 90 large companies have their headquarters in Munich, which is the home of global players such as Siemens, BMW, Linde, Infineon, MAN AG, Escada, Allianz, Munich Re, Knorr-Bremse AG, Rohde & Schwarz, HVB group, Hypo Real Estate and many others.
- 17.
The more than 1000 major foreign companies that had either their German or European headquarters in the city or were represented there in 2010, included Apple, Sun, Microsoft Germany, Oracle, Yahoo, McDonald’s and Sony.
- 18.
In the Federal Republic of Germany, the Länder have their own constitutions, administrations and parliaments and are key players in the area of knowledge economy strategies because they are largely responsible for culture, education, research and development policy and exercise a substantial influence on certain economic sectors, especially those of media and health-biotechnology.
- 19.
Currently the Munich region has a superb educational system, one of the highest ranked in Europe, and caters for a very large student population. More than 104,000 students are enrolled in higher educational establishments based within the region (as of the 2011/2012 winter semester), 14.2 % of whom are foreign students; a large proportion of graduates are recruited by local business.
- 20.
The Munich Technology Center (MTZ), founded in 1984, was one of Germany’s pioneers in this sector.
- 21.
In order to attract possible investors from former Middle-and Eastern-German provinces—as reported by Hulsbeck and Lehmann (2007)—Bavarian politicians used their talents to convince various industrial leaders to relocate their companies to Bavaria, and this kind of talent has resulted in economical growth as well as corruption scandals (e.g. the “Amigo Affairs” of 1993 and 2004).
- 22.
According to the official statistics of the Land of Bavaria (Bayerische Staatsregierung), implementation of the Zukunft Bayern project, from 1994, involved total spending of 2887 billion euros, 49.1 % was used for training, research and high technology facilities, 15.1 % on support for start-ups and on infrastructures, 12.8 % on the labour marked and related social policies, 12.3 % on environmental policies and new energy and 11.9 % on cultural policies. As regards implementation of the High-Tech Offensive, there was a total budget of 1.35 billion euros, of which 49.1 % went on the creation of high-tech centres, 19.8 % on infrastructures, 13.2 % on new technologies and 13 % on incentives for businesses to relocate to the region.
- 23.
The Bavarian State government has a consolidated conservative CSU majority, whilst the city government is traditionally oriented towards the Social Democratic Party, which more recently has ruled in coalition with the Green Party.
- 24.
On the whole, about 200 biotechnology companies and several university departments and research institutes, employing over 13,000 staff are based in the biotechnology clusters, and almost half of the companies are financed through venture capital.
- 25.
The Garching Research Center comprises several scientific departments of the two main university (TUM, LMU), the headquarters of the European Southern Observatory (ESO), the Federal Research Institute for Food Chemistry, the Bavarian Center of Applied Energy Research, the Reactor Safety Research, the General Electric Global Research Center, the Walter Meißner Institute (low-temperature physics) and the Leibniz-Rechenzentrum (central computing facilities for the Munich universities and other research institutes) of the Bavarian Academy of Sciences and Humanities, the BMW Motorsport (high performance motorsport vehicle research and development), and several Max Plank Institutes (for Astrophysics, Extraterrestrial Physics, Plasma Physics, Quantum Optics).
- 26.
A high proportion of oldest high-tech industries are located in the city of Munich. In 1987, there were 1325 high-tech companies registered inside the city limits. Analysis of the incidence of newly founded businesses in the high level technological sectors shows that, at the end of the 1980s, the city of Munich already led in these fields (Sternberg, 1998).
- 27.
Since 1999 the Chamber of Industry and Commerce for Munich and Upper Bavaria and the Department for Employment and Business of the city of Munich have analysed the development of this industry. In the 2010 survey (IHK-LH München-Referat für Arbeit und Wirtschaft, 2010) the economic sectors analysed have been the following: media (publishing, printers, sound processors, image and data carriers, film and video producers, broadcasters, manufacturers of radio and television programmes); advertising, market communication and research; journalism, information services and agencies; software, data and IT services, e-commerce; transport, cable and network operators; parts and components; terminal equipment and devices; distribution (commercial agencies and wholesalers).
- 28.
The definition of creative industries assumed in the ACRE Report covers the core aspects of the cultural segment, including journalism, films and video, television and radio, music, interactive leisure software, the visual and performing arts and the retail of cultural items, plus architecture, design, advertising and software engineering.
- 29.
Statistical analyses, derived from the ACRE Report 2.7, are based on data supplied by Bundesagentur für Arbeit (BAA). The figures concerning employment would be higher if freelancers, self-employed persons and civil servants were included in the employment statistics.
- 30.
Among highly the qualified professional group, the incidence of data processing experts, banking professionals, insurance experts, entrepreneurs, senior executives, division managers and electrical engineers is particularly significant in the Munich region.
- 31.
This trend confirms the general decrease in employees subject to social insurance contributions that started in 2000 in the sub-sector of creative industries, and led to drastic reductions in certain segments, above all the art/antiques trade and architecture as well as video, film, music and photography, and the emergence of other segments, such as computer games, software and electronic publishing, as well as Radio and TV, and advertising.
- 32.
According to the definition in use, the concept of institutional thickness refers to broader social, political, and economic structures, the qualities of the institutional arrangements, the legitimacy of institutions and their level of interaction in a region conducive to economic growth (Amin & Thrift, 1995; Rode et al., 2010).
- 33.
The intensifying interrelationship between the city, its surrounding region and the rest of Bavaria is reflected in the increased number of commuters. The Development Report 2005 (City of Munich-Department of Urban Planning and Building Regulation, 2005) shows that the overall number of individuals commuting into Munich rose by 25 % between 1995 and 2000, from 260,000 to more than 300,000 per day, whereas the number of commuting out of the city rose by 22 % to around 106,000. However, given that Munich remains the key economic centre of Bavaria, the outward movement of population generates a substantial amount of in-commuting.
- 34.
The analysis is based on the 2011 Register of Companies of the Chamber of Industry and Commerce (IHK) for Munich and Upper Bavaria. The database is divided into two business groups, according to the business’s yearly turnover (with less or more than 17,500 €). Selected economic activities (the data of which are anonymous) are those classified as KCS, a total of more than 77,000, of which 55 % are located within the city of Munich. About half of these companies belong to the group with a yearly turnover of less than 17,500 €, which are not normally registered in any statistics. Most of these are very small service providers (consisting of one person) or businesses which operate in creative industries, mainly start-ups, but also include jobs that were previously subject to social insurance contributions, which have been converted into freelance jobs (see von Pechmann, 2012; Söndermann, 2006).
- 35.
Munich is the second largest telecommunications centre in Germany and it is formed by small-scale service providers and shops and by major cable and network operators with global activities (e.g. Siemens AG, BT Germany, 02 GmbH).
- 36.
German Federal Statistical Office, 2009 data. If we consider the incidence of the population with a migrant background, the proportion rises to 35 % in the same year.
- 37.
The section of the population most severely affected by poverty and in need of social assistance are children and young people up to 14 years old (12 % in 2011).
- 38.
With the exception of Feldmoching-Hasenbergl, these are the districts where recently (2007–2011) there has also been an increase in the numbers of people drawing social welfare, particularly among the non-German population (LH München-Sozialreferat, 2012).
- 39.
According to City of Munich’s official statistics, in 2005, around 11 % of the city housing market stock were state-supported homes. This proportion places Munich in the mid-range among the major German cities.
- 40.
This also explains why the district of Trudering-Riem has had the highest increase of the population receiving social assistance (from 5.6 % in 2007 to 7.1 % in 2011).
- 41.
The outcomes of these policies, in quantitative terms, can be considered significant. Since the launch of the housing policy action programme “Living in Munich” (Wohnen in Muenchen) in 1990, a total of 115,000 new housing units have been created and about 20 % of them have been financially supported (LH München-Referat für Stadtplanung und Bauordnung, 2012a).
- 42.
LH München, Statistisches Amt, München 2006.
- 43.
GWG was founded in 1918 and it is one of the oldest local authority housing associations in Germany and a major pillar of publicly funded rental housing construction in the city of Munich. GEWOFAG was founded in 1928 and is a municipal company. Both these publicly owned companies currently manage a housing stock of more than 62,000 flats (publicly funded and privately financed), mostly concentrated in the urban districts of Milbertshofen-Am Hart, Ramersdorf-Perlach, Feldmoching-Hasenbergl, Moosach, Au-Haidhausen, Sendling-Westpark, Hadern, Berg am Laim, Giesing, Neuhausen and Sendling/Laim. Thirty percent of the privately financed stock is let to tenants on low and medium incomes. They support more than 100,000 tenants and the total housing stock managed amounts to almost 10 % of the total rented housing in the city of Munich.
- 44.
Recently these companies have undertaken as their primary task the extensive renovation and energy modernization of older buildings along with the preservation and maintenance of public spaces and green areas and the improvement of infrastructural services.
- 45.
From the end of the war until 1960, 134,500 apartments were built, 40 % of them state-subsidised housing, and until 1970 whole districts were developed, such as Neuperlach, Hasenbergl and Fürstenried-West, which contain a significant portion of public housing (Hafner et al., 2007).
- 46.
GBW manages more than 10,000 apartments in Munich, with about 85,000 tenants. Since almost all of GBW’s shares are held by the state-owned bank BayernLB, the latter’s decision to liquidate its holdings has given rise to widespread social strains. In order to maintain social stability, the local government plans to allocate more than 24 % of its 3-year expenditure budget (2012–2016) for housing and the possible acquisition of the shares in GBW company, while 32 % is reserved for educational infrastructure, child day care and nurseries (City of Munich-Department of Labor and Economic Development, 2013). More than half the city budget is thus being employed to prevent the displacement of tenants and to ensure good living conditions in different neighborhoods around the city.
- 47.
The most significant of the sectoral policies are: the long-term action programme “Living in Munich”, concerning housing policies; the “Munich Employment and Qualification Programme”, for the promotion of innovative labour market projects; the “Munich Gewerbehof-programme”, aimed at safeguarding the craft trades and traditional industries, and the “Climate Protection Implementation Programme”, aimed at making environmental protection an integral part of urban development.
- 48.
The main localized action programmes are the Middle Ring action programme, for improving the quality of life adjacent to this busy traffic artery, and the “Social City” programme, for the promotion of self-renewal processes in the city districts with a significant need for social environmental action.
- 49.
The inner city has been most affected by the gentrification processes and the resident population has consequently declined by up to 7000 inhabitants. Although in recent decades the availability of residential spaces has increased, the resident population has remained constant. This is due primarily to the fact that the housing demand of single-person households is particularly high in this area (LH München-Referat für Stadtplanung und Bauordnung, 2012a).
- 50.
The main ambition of these policies is to combine the supply of affordable housing with the concepts of social and functional mix and land use control, with pilot projects embodying the motto “compact, urban, green”.
- 51.
The action programme “Living in Munich”, launched in 1990, was then integrated into “Perspective Munich”, and for the period 2001–2006 provided for the creation of an average of 7000 dwellings per year, over 25 % of which were built with public-sector subsidies. Due to the unfavourable economic climate, no more than around 4500–5000 units were completed each year between 2001 and 2004, while in the same period targets for subsidised housing construction were almost achieved (City of Munich-Department of Urban Planning and Building Regulation, 2005). With the programme update for the period 2007–2011, increased funds were disbursed by the municipality, and more effort was directed towards the rental sector, according to the “Munich Model for Rental Housing”, which caters mainly for families with children belonging to the lower/middle-income group; the programme also attracted financial resources from the federal state, managed by local government to subsidize home-ownership by granting loans at affordable rates. The latest programme update for the period 2012–2016 identifies new priorities and provides for the construction of an average of 3500 housing units a year, of which over 50 % relate to subsidized units targeted at different demand segments.
- 52.
Reduction of the existing deficit of green spaces in the various districts has been mainly assigned to the special redevelopment projects, particularly in areas bordering on the inner city.
- 53.
This measure applied to housing means the building of one third non-subsidised, one third subsidised according to the Munich Model, one third standard low-income housing.
- 54.
During the several meetings with the project’s advisory group, real estate and business actors were also involved and the open planning process led to a high degree of agreement.
- 55.
In Ackermannbogen, some 40 % of the apartments are developed by building cooperatives and community building groups and a significant proportion of the “Munich Mix” for housing consists of rental housing promoted by income-oriented subsidy funds provided by the City of Munich and the Bavarian government.
- 56.
This special programme consists of a joint initiative of the federal and state governments launched at the end of the 1990s to prevent rising social polarisation and its manifestation in urban space.
- 57.
The Social City programme was funded by the federal government, the government of Bavaria and the city of Munich, while the basic programme for urban development funding was funded by the government of Bavaria (60 %), and the city of Munich (40 %). The total funds allocated to the district refurbishment programme have been provided by public authorities, private organizations and public-private partnership (LH München-Referat für Stadtplanung und Bauordnung, 2011, 2012b). Since 2001 the regeneration programmes have also been started in other urban areas and the Social City programme has been extended to further districts situated on the Mittlerer Ring. The various actions of district refurbishment envisaged have been implemented with the active involvement of the inhabitants and the local actors at an early stage.
- 58.
Municipalities are very interested to develop land because they retain a percentage of income tax generated in each Land, in accordance with their population size, and receive both transfer payments, depending on the extent of their service responsibilities, and property taxes (Evans, 2012).
- 59.
The success of Munich in the field of land consumption control has recently been recognized by the European Environment Agency which, in its report on urban sprawl in Europe, pointed out that “only Munich has remained exceptionally compact if compared to many other European cities and it is the only urban area among the 24 urban areas studied where the built-up areas have grown at a clearly slower pace than the population” (EEA, 2006, p. 46). According to the Agency, the lesson from Munich can provide the good practice basis for sustainable development that many other cities throughout Europe urgently require.
- 60.
The Munich Entrepreneurship Agency (MEB), founded in 1998 in cooperation with the Chamber of Industry and Commerce for Munich and Upper Bavaria, has established itself as key instrument of this policy. It is made up of several integrated services, including the “Munich fund” loan grants, provided by local saving banks for a defined period, to enable small enterprises to start their own business. As shown by a recent evaluation of the activities carried out by the MEB, about half of the service users have achieved tertiary education and more than 70 % have become individual entrepreneurs (LH München-Referat für Arbeit und Wirtschaft, 2010).
- 61.
The eight structures at present developed—which have a total rentable area of approximately a 100,000 m2, and can accommodate more than 340 companies—guarantee long-term oriented rental contracts with lower rent, despite their central location in the city.
- 62.
In relation to childcare facilities, the local government has resolutely oriented the resources derived from the application of the SoBoN device towards the creation of kindergartens, allowing more than 80 % of children to use this service (LH München-Referat für Arbeit und Wirtschaft, 2012).
- 63.
With 39 general and 78 vocational training schools and 36 highly specialised vocational training centres operated by the municipality, Munich has the largest municipal school and training system in Germany.
- 64.
According to the report drawn up in 2005 (City of Munich-Department of Labour and Economic Development, 2005), in recent years, the MVHS has promoted several educational programmes every year involving overall more than 200,000 people. It organizes life-accompanying learning in several fields, frequently in cooperation with other Munich-based cultural and educational institutions, universities, societies and associations. The education programme for senior citizens alone has more than 10,000 participants per year. Courses, which can be attended by people from various walks of life and various backgrounds, are run at 95 schools distributed mainly in the inner city.
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Acknowledgements
We are grateful to the Chamber of Industry and Commerce (IHK) for Munich and Upper Bavaria for helpful provision of the database used for the case study of Munich. The processing and geo-referencing of the data and their rendering into map format was performed by Anton von Pechmann, who has also helped to edit the paragraph concerning the spatial distribution of KCS.
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Mazzoleni, C., Pechmann, A. (2016). Geographies of Knowledge-Creating Services and Urban Policies in the Greater Munich. In: Cusinato, A., Philippopoulos-Mihalopoulos, A. (eds) Knowledge-creating Milieus in Europe. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-45173-7_9
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