Radical Innovation Instead of Systematic Downscaling
Policy Options for Regions Strongly Affected by Demographic Change


The Berlin Institute for Population and Development was commissioned by the Ministry of Transport, Construction and Urban Development (BMVBS) to produce an evaluation of policy options for regions strongly affected by demographic change.

After a long period of growth the population of Germany has begun to shrink since 2003. So far the number of inhabitants has decreased by about half a million. Projections for 2050 predict a population decline of about eight million.



Germany’s Population Is Shrinking

Official population estimates assume a continuing rise in life expectancy, a fertility rate of 1.4 children per woman and annual net immigration of 200,000 by 2050. This would lead to a population decline of 7.7 million. The decline would be considerably smaller (minus 2.7 million), if instead 1.6 children were born to every woman and people were to live even longer. If, on the other hand, women were to have only 1.2 children and only 100,000 people were to immigrate to Germany every year, the population loss would amount to more than 12 million.


This decline will in all probability have the most grave impact on those regions that have already been affected for some time by out-migration and an aging population. These areas are located mainly in eastern Germany but the trend is now spreading further westwards.


Regions of Growth and Decline in Germany


According to current projections by the Federal Office of Construction and Regional Planning, the population in more than half of Germany’s administrative districts (Landkreise and Kreisfreie Städte) will have shrunk considerably by 2025. Not only will there be fewer people living in the eastern German regions, but also in the traditional industrial centres of the Saarland and the Ruhr. The obliteration of whole sectors and the lack of prospects on the regional labour markets encourage the population to move elsewhere. Only a few districts are likely to become boom regions with a population increase of more than 10 percent. These are located mainly around Berlin and Munich.


The population in more than half of all districts is already shrinking for two reasons, as shown below:


Although the number of inhabitants has been declining in Germany since 2003, in some areas population growth is still strong. The dark-blue mainly economically prosperous areas are experiencing in-migration above all of young people, and their birth rates are therefore higher than their mortality rates. The light-green zones have also benefited from in-migration but they do not have enough children to compensate for their mortality rates. The dark-green areas denote a double loss of population – because people are moving away and because more people are dying than are born. This trend already applied to more than half of all Germany’s administrative districts in 2007.


Counteracting and Adapting to Demographic Trends

Having already recognised these trends some time ago policymakers have generally responded to demographic change with one of two strategies: either they try to counter the trend or they try to adapt to it. Neither strategy has so far produced the desired results, however. Efforts to counter population decline generally pursue traditional growth-oriented industrial and structural policies, which use conventional strategies like land allocation for industry and housing together with job creation to try to attract industry to an area and hence prevent out-migration. Yet the problems of rural depopulating regions prove particularly resistant to traditional structural policy, precisely because their birth rates are low and people tend to move elsewhere. Investments come to nothing, for experience has shown that even the best family policy and large subsidies for industry are not sufficient to reverse demographic trends. Even regions in the former East Germany that are now becoming demographically stable, such as Leipzig, Dresden, Jena or Erfurt, have only succeeded in attracting people from the immediately surrounding rural areas. They thus aggravate the problems of areas with shrinking populations without fundamentally altering their own prospects. The strategy of adaptation recognises the consequences of demographic change, particularly aging and declining populations, and tries to adapt communities to the new conditions. De facto this means a gradual reduction in basic services: schools are closed, public transport services cut back, public administrations merged and so on. When set against the background of a national population decline this inevitably leads to a concentration of people in urban centres, for people are driven away from areas with a declining infrastructure and move to places where they find more jobs and schools and better leisure facilities for their children. Adaptation thus actually encourages demographic decline, even though it was supposed to do the opposite.

In practice different government departments tend to employ a mixture of the two strategies with the result that measures can actually have a mutually hindering effect. Take, for example, the problem of large numbers of poorly qualified young people living in outlying locations. While the Ministry of Economics tries to counter this by introducing measures to improve young people’s level of qualifications and provide them with apprenticeships, the Ministry of Transport responds to the decline in population by reducing public transport. The young people then have difficulty reaching their training courses or apprenticeships. As a result those with more initiative move elsewhere while the less active remain behind. The situation then becomes a case for the Ministry of Labour and Social Affairs.


Given that such strategies have failed to reverse demographic trends in any area eligible for assistance over the past twenty years, the evaluation of the Berlin Institute calls for a paradigm shift in declining regions. Above all, with regard to the former East Germany it urges that the remaining ten years until funding from the Solidarity Pact II [a government fund to promote investment in eastern Germany] runs out be used to bring about a radical modernisation of structures.


The following points should be borne in mind when adopting a new approach


First: Policymakers must accept demographic developments not only as a fact but also as a basis for all socioeconomic activity. They must abandon any idea of growth in the affected areas, since all efforts to date to promote growth in these regions have failed in the face of demographic trends. In the long term policymakers will in any case need to develop concepts for prosperity without growth for nations with aging and declining populations. The limits to growth are revealing themselves here in Germany not through a lack of resources – as was assumed for a long time – but through demographic change.  In that respect areas with declining populations are test cases for the Europe of tomorrow.


Second: Modernisation in declining areas means achieving old goals by new means, for society’s goals remain the same. Even declining regions require energy supply, drinking water, healthcare, schools and public transport. Because the traditional elements of such an infrastructure cannot be made ever smaller, however, a change of system is often required, and this offers a chance for a change of direction. A school, for example, can no longer be viewed as a fixed structure with classes of a certain predetermined size and number of pupils, but as a service. The task of a school is to prepare children for life. Therefore it is ultimately unimportant what form a school takes. Viewed from this perspective it would be possible to have one-class schools, schools that alternate in a weekly rhythm between two different locations, that use tele-instruction or that are provided with teachers from a central pool, so that instead of having many pupils commuting long distances, only a few teachers need to do so. This kind of flexibility would allow schools – the most important factor for keeping families in a region – to stay local even with declining numbers of pupils.

Model projects have shown that it is possible to bring about an economic turnaround in disadvantaged regions by switching to a "solar economy", even though this is generally regarded as too expensive and therefore rarely realised. By using biomass, biogas, wind and solar power some communities have managed to make themselves independent of the major energy suppliers and to generate financial surpluses with which they can make their area more attractive for new inhabitants and commerce. In regions where traditional growth concepts have failed, an ecologically driven local economy can help to achieve prosperity.


Third: Forward-looking modernisation concepts often turn out to be win-win situations because they generate synergies – in other words they tend to help solve other problems as well. Thus a decentralised energy supply using renewable resources not only produces a monetary gain; it also has the added advantage of being technologically advanced and climate neutral, and in the medium term larger regions if not indeed the whole country will require such energy sources. Smaller communities can become energy independent by working together to create a “virtual power station” whereby each community contributes energy from suitable sources, whether biogas, biomass, sun, wind or geothermal energy. Associations of this kind are less vulnerable to power failures and fluctuations. Demographic crisis areas are predestined for energy autonomy, because obtaining their energy supply from large grid systems is becoming ever more expensive. In addition, it makes sense to test and gain experience with alternative energy sources on a small scale because mistakes are less expensive. Crisis regions can thus become engines of innovation and can spur the regional economy.


Fourth: In order to break new ground in these ways it will be necessary, at least temporarily, to suspend certain laws and guidelines. Setting up a smaller-scale waste water system, providing decentralised day-care for young children or introducing an innovative local transport system in declining regions cannot be carried out if all the local, national and EU regulations and norms still have to be observed. Indeed, bureaucracy makes innovation almost impossible. New concepts must likewise be exempt from planning regulations. Future-oriented ways of providing public services must first be developed through creative processes before they can be subjected to planning regulations. Because we do not yet know what the new concepts for providing services in outlying areas will be they cannot be planned in advance; they can merely be enabled. Those responsible for innovation therefore require as much freedom as possible.


Fifth: The affected regions therefore require a high degree of planning autonomy. Far-reaching decision-making competencies in conjunction with the requisite financial resources must be shifted to the level of mayor or district council. In Sweden or Finland, for instance, local councils have the financial autonomy to decide what kind of schooling they provide, to make their own arrangements for children’s day-care and care of the elderly as well as for basic healthcare services. The key to changing structures and ultimately to modernisation thus lies in the hands of the local councils. This also means that citizens feel taken seriously and are more willing to assume responsibility.


Sixth: The "human factor" must be much more strongly promoted. Particularly in crisis regions it is always individuals who create new perspectives. New ideas and concepts generally develop from the bottom up and therefore the active participation of the local inhabitants is required.  Social networks and an active civil society are always at the centre of any such developments. Thus in the Rhone, an area in the former West Germany strongly affected by demographic change, the inventor of the soft drink Bionade managed to create hundreds of jobs using an idea that no economic development programme in the world would have come up with. Wherever civil engagement is to be observed in crisis regions, bureaucratic hurdles must be removed so as to allow creative potential to develop.


Seventh: A good way for struggling regions to show their potential is to have them compete for funding. Such programmes should be limited exclusively to regions categorised as “particularly serious demographic cases”: i.e., where there is a strongly aging population, a major population decline, low GDP and high youth unemployment. Rather ironically, these areas have a high innovative potential for radical modernisation, because recovery via more traditional development projects is out of the question. When applying for funding these regions must make it clear they are willing and able to take their affairs into their own hands and to come up with forward-looking concepts in the field of energy, schools, farming and localised supply chains, mobility or healthcare. Part of the funding should be in the form of interest-free loans which are then repaid into a fund used to finance further projects. For each project indicators must be fixed and goals defined at the planning stage. If goals fail to be achieved then the failure of the project must be accepted as part of the learning process. This new kind of funding culture would put paid to more comprehensive indiscriminate funding or to funding that depends on a more general but irrelevant political climate. Instead, their only criterion is their success.


Eighth: Such funding competitions will reveal that it is not possible to help some regions. And while crisis-ridden areas cannot be simply written off or regarded as lost, they define themselves as impossible to help if no innovative individuals can be found to try to create a future. Subsidies and artificial incentives for companies will be of no use in such areas, yet it is still the job of the state to provide the people in these regions with appropriate assistance. This should, however, be limited to essential services, such as emergency services, access to police forces within a reasonable amount of time, nursing care for the very elderly, telephone and internet connections. Such regions can become attractive for pioneering individuals seeking to move to less developed areas or for artists and people wishing to engage in social experimentation. But above and beyond this the lack of perspective means that the principle of having “equal living conditions” to other regions must be abandoned.


The evaluation was commissioned by the Federal Ministry of Transport, Construction and Urban Development.

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