Resilience and specialization – How German regions weathered the Great Recession

Abstract

Abstract This paper takes an explorative approach for analyzing the economic development of German Spatial Planning Regions during and after the Great Recession covering the period from 2007 to 2017. Specifically, we are interested in the relation between the short- and the mid-term resilience of regions and in the role of the underlying economic structure in this regard. For this purpose, we categorize regions by their GDP per capita growth in the resistance and recovery phase and then characterize the resulting region types by their average structural characteristics and track their performance through the renewal and reorientation phase. Our analysis reveals that, in general, larger shares of manufacturing, higher degrees of export orientation and specialization, and lower shares of public sector services are associated with weaker resilience and stronger recovery capacity. In addition, we observe a catch-up effect of regions with at least either an above-average resistance or recovery compared to regions with both weak resistance and slow recovery. However, we do not find a substantial reorientation effect because, in the case of Germany, the advantages of regional economic specialization still outweigh its potential disadvantages.