Economy of Berlin
The economy of Berlin has been affected through the years by the city's changing political fortunes. Berlin was once a major manufacturing center and the economic and financial hub of Germany. The city suffered economically during the Cold War, when West Berlin was isolated geographically and East Berlin suffered from poor economic decisions made by East Germany’s socialist central planners. Since reunification, powerful service, technology and creative sectors established in the city.
Berlin was founded at a point where trade routes crossed the river Spree and it quickly became a commercial center. During the early modern period, the city prospered from its role as Prussian capital by manufacturing luxury goods for the Prussian court and supplies for the Prussian military.
During the mid-19th century, the Industrial Revolution transformed the city’s economy. Berlin became Germany’s main rail hub and a center of locomotive manufacturing. The city became a leader in the manufacture of other kinds of machinery as well, and developed an important chemical industry sector. Toward the end of the 19th century, Berlin became a world leader in the then cutting-edge sector of electrical equipment manufacturing. As the de facto center of the German Zollverein, or Customs Union, and later the seat of the Reichsbank, Berlin became Germany’s banking and financial center as well.
Berlin suffered from both the German hyperinflation of the 1920s and the Great Depression of the 1930s. The city’s economy revived as a center of weapons production under the Nazis, but it lost a pool of entrepreneurial talent when the Nazis forced Jewish businessmen to sell their holdings and ultimately massacred most who did not flee Germany.
After the World Wars
World War II severely damaged Berlin’s industrial infrastructure, and Soviet expropriation of machinery and other capital equipment as “war reparations” further damaged Berlin’s industrial base. Soviet restrictions on transport impeded communication with West Germany and ended hopes that Berlin would resume a role as Germany’s financial center; most banks established headquarters in Frankfurt. In East Berlin, socialist central planners rebuilt a manufacturing sector, but one that was not competitive internationally or responsive to market demand. West Berlin’s economy grew increasingly dependent on state subsidies and on its role as an educational and research center.
Berlin’s and Germany’s unification brought the collapse of many of East Berlin’s producers, which could not compete with market-disciplined Western competitors. Massive unemployment was only partly compensated by the growth of jobs in the construction and infrastructural sectors involved in rebuilding and upgrading East Berlin’s infrastructure. The move of the federal government from Bonn to Berlin in 1999 brought some economic stimulus and tens of thousands of jobs from government employees, parliamentary services, lobbyists and journalism to Berlin. Berlin’s service sectors have also benefited from improved transportation and communications links to the surrounding region. While some manufacturing remains in the city (Siemens and Schering have headquarters in Berlin, for instance), the service sectors have become the city’s economic mainstay. Recently, research and development have gained significance, and Berlin now ranks among the top three innovative regions in the EU (after Baden-Württemberg and the Île-de-France region). However, growth in the research and development sector has not been sufficient to offset job losses, and unemployment remains high, at 16.5% as of October 2006.
Fast-growing sectors are communications, life sciences, mobility and services with information and communication technologies, media and music, advertising and design, biotechnology and environmental services, transportation and medical engineering. Berlin is among the top five congress cities in the world and is home to Europe's biggest convention center in the form of the Internationales Congress Centrum (ICC). It contributes to the rapidly increasing tourism sector encompassing 592 hotels with 90,700 beds (2007 figures) and numbered over 22 million overnight stays by 9.8 million tourists in 2011. Berlin has established itself as the third most visited city destination in the European Union.
Berlin's economy has grown continuously above the German average in the period from 2005 to 2013. This trend is set to continue, with important improvements to infrastructure, such as the biggest European crossing station, Berlin Hauptbahnhof (inaugurated 2006), the opening of the 3rd biggest German airport, Berlin Brandenburg Airport, scheduled for 3 June 2012 and intended as the major eastern European hub, reflecting the expansion of the EU towards the east. Also, the revered Berlin music scene, attracting tens of thousands of young tourists flying in for the city's famed clubs has become an increasingly important part of the economy, attracting artists and tourists alike, and is set to gain the support of the new 2011 government in order to protect the free spaces required by the scene through the creation of a city music board modeled after the German film promotion.
Siemens, a Fortune Global 500 company and one of the 30 German DAX companies, is headquartered in Berlin. The state-owned railway, Deutsche Bahn, has its headquarters in Berlin as well. Many German and international companies have business or service centres in the city.
Among the 20 largest employers in Berlin are the Deutsche Bahn, the hospital provider, Charité, the local public transport provider, BVG, and the service provider, Dussmann and the Piepenbrock Group. Daimler manufactures cars, and BMW builds motorcycles in Berlin. Bayer Health Care and Berlin Chemie are major pharmaceutical companies headquartered in the city. The second largest German airline Air Berlin is also headquartered in Berlin.
Berlin has 788 hotels with 134,399 beds as of December 2014. In 2014 the tourism figures for Berlin have once again broken records with 28.7 million overnight stays (+6.5% over 2013) and 11.9 million guests (+4.8\%). Berlin has a yearly total of about 135 million day visitors, which puts it in third place among the most-visited city destinations in Europe. International visitors made up 43.6 per cent of the overnight stays in 2014.
Berlin is among the top three convention cities in the world and is home to Europe's biggest convention center, the Internationales Congress Centrum (ICC) at the Messe Berlin. Several large-scale trade fairs like the consumer electronics trade fair IFA, the ILA Berlin Air Show, Berlin Fashion Week (including the Bread and Butter tradeshow), Green Week ("Grüne Woche"), the transport fair InnoTrans, the adult entertainment fair Venus and the tourism fair ITB are held annually in the city, attracting a significant number of business visitors.
Berlin is home to many international and regional television and radio stations. The public broadcaster RBB has its headquarters in Berlin as well as the commercial broadcasters MTV Europe, VIVA, and N24. German international public broadcaster Deutsche Welle has its TV production unit in Berlin, and most national German broadcasters have a studio in the city including ZDF and RTL. American radio programming from National Public Radio is also broadcast on the FM dial.
Berlin has Germany's largest number of daily newspapers, with numerous local broadsheets (Berliner Morgenpost, Berliner Zeitung, Der Tagesspiegel), and three major tabloids, as well as national dailies of varying sizes, each with a different political affiliation, such as Die Welt, Junge Welt, Neues Deutschland, and Die Tageszeitung. The Exberliner, a monthly magazine, is Berlin's English-language periodical focusing on arts and entertainment. Berlin is also the headquarters of the two major German-language publishing houses Walter de Gruyter and Springer, each of which publish books, periodicals, and multimedia products.
Industries that do business in the creative arts and entertainment are an important and sizable sector of the economy of Berlin. The creative arts sector comprises music, film, advertising, architecture, art, design, fashion, performing arts, publishing, R&D, software, TV, radio, and video games. Around 22,600 creative enterprises, predominantly SMEs, generated over 18,6 billion Euro in total revenue. Berlin's creative industries have contributed an estimated 20% of Berlin's gross domestic product in 2005.
Berlin is an important center in the European and German film industry. It is home to more than 1000 film and television production companies, 270 movie theaters, and around 300 national and international co-productions are filmed in the region every year. The historic Babelsberg Studios and the production company UFA are located outside Berlin in Potsdam. The city is also home of the European Film Academy and the German Film Academy, and hosts the annual Berlin Film Festival. Founded in 1951, the festival has been celebrated annually in February since 1978. With over 430,000 admissions it is the largest publicly attended film festival in the world.
The Berlin-Brandenburg capital region is one of the most prolific centers of higher education and research in the European Union. The city has four public research universities and 27 private, professional and technical colleges (Hochschulen), offering a wide range of disciplines. Over 160,000 students were enrolled in the winter term of 2012/13. The three largest universities combined have approximately 100,000 enrolled students. They are the Humboldt Universität zu Berlin (HU Berlin) with 34,000 students, the Freie Universität Berlin (Free University of Berlin, FU Berlin) with about 34,500 students, and the Technische Universität Berlin (TU Berlin) with 30,000 students. The Universität der Künste (UdK) has about 4,000 students and the Berlin School of Economics and Law has enrollment of about 9,000 students.
The city has a high density of research institutions, such as the Fraunhofer Society, Gottfried Wilhelm Leibniz Scientific Community and the Max Planck Society, which are independent of, or only loosely connected to its universities. A total number of 62,000 scientists are working in research and development. The city is one of the centers of knowledge and innovation communities (Future Information and Communication Society and Climate Change Mitigation and Adaptation) of the European Institute of Innovation and Technology (EIT).
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