Aerial view of a town, source: iStock.com/cinoby

© iStock.com/cinoby

The Leibniz Institute for Economic Research in Halle (IWH) has presented its evaluation of the Joint Task "Improving the Regional Economic Structure" (GRW). The results show unequivocally that the support for investment in regions that are structurally lagging behind is indeed having the desired positive effect.

In a comment marking the publication of the report, Federal Minister for Economic Affairs and Energy Peter Altmaier said: “Our regional support for business is a strong and effective tool. Together with the Länder we are creating targeted incentives for investment, thus generating growth in regions that are economically less powerful, helping to reduce regional disparities and safeguarding jobs in those regions. This is why regional support for business will continue to make an important contribution to cohesion in our country and is doing so especially now that we are facing the coronavirus crisis.

At the centre of the evaluation report is an impact analysis for the funding period from 2009-2016 which compared the development of companies that received funding from the GRW to that of a control group of very similar companies that did not benefit from the support. The experts on the evaluation team found that the GRW support notably triggered a growth in employment, which still persists even several years after the cessation of the funding. This means that the main objective of the GRW, which is to create permanent jobs in regions that are structurally lagging behind ad thereby create equivalent living conditions across Germany, is being achieved by the instrument. Beyond this, the GRW funding also has a positive effect on beneficiaries’ turnover and on regional incomes.

The federation supports the GRW scheme with an annual €600 million. This is matched by the Länder, meaning that €1.2 billion is available per year. Under its stimulus and crisis-relief package, the Federal Government will make available an additional €250 million for the GRW in both 2020 and 2021. This funding is to be used to support regional economic structures during the coronavirus pandemic.

For further information on the Joint Task “Improving the Regional Economic Structure” (GRW), please click here; for more information about the evaluation of the GRW, please click here (in German).