Economic history: After the war and dismantling had destroyed 66% of industrial capacity – 76.5% in West Berlin, 48% in East Berlin – the division of Germany and Berlin, the loss of the capital city, led to the 1948 blockade / 49 and the continued isolation of the western part from the surrounding area largely lost the traditional bases of the economy. Both parts of the city were economically and financially integrated into the two parts of divided Germany. Berlin was able to maintain its former importance as one of the largest industrial cities in Germany, but did not regain its former importance as the most important trade, transport and financial center in Central Europe and as the economic center of Germany.
Due to its political situation (mainly as a result of the politics of the USSR), Berlin (West) had particular difficulties in the economic development phase after the Second World War (in 1950, for example, there were still around 300,000 unemployed). In order to meet the labor demand associated with the economic upswing (and the absence of 50,000 employees after the building of the wall) in the 1960s, employees were recruited from the rest of Germany and from abroad. 1970-84, however, the number of jobs in industry decreased by 42%.
For Berlin (West) the manufacturing industry and the service sector were the most important branches of the economy. Since 1970, the service sector (especially the public service) has gained more and more importance compared to industry, while the number of employees in industry has almost halved since 1960. Alongside Hamburg and Munich, Berlin (West) was Germany’s largest industrial city; important branches were the electrotechnical, chemical, food and beverage industries (e.g. tobacco processing) and vehicle construction. The textile and clothing industry had lost its importance.
In Berlin (East) the share of the nationally owned industry was in the context of the economic planning of the GDR constantly increasing at the expense of the private sector. Berlin (East) was an important industrial center, which (1985) generated 5.6% of the total industrial gross production of the GDR – plus Berlin (East). Electrical engineering and electronics were particularly important, followed by mechanical engineering and vehicle construction, light industry, the chemical industry and the food industry. Because of the role of Berlin (East) as the administrative center of the GDR, the proportion of those employed in “non-production areas” (public administration and others) was particularly high at 31.3% (1985). 35.9% of the workforce worked in the industrial sector (industry, handicrafts, construction), 26.1% in trade and transport.
The reunification of Germany, the opening of the borders to Eastern Europe and the completion of the European single market presented Berlin and the surrounding area with diverse economic and transport policy challenges. After the artificial separation from the surrounding area ceased to exist, Berlin had to rebuild its intertwined relationships with the neighboring regions. In addition, Berlin was dependent on the support of the federal government due to the geopolitical situation before unification. After the unification, these measures were dismantled, which led to the companies in particular having to compete with fewer subsidies under new conditions.
Current situation: At € 136.6 billion, 4.2% of Germany’s gross domestic product (GDP) was generated in Berlin in 2017. With a GDP per resident of € 38,032, Berlin is slightly below the German average. The unemployment rate in Berlin was 9.0% in 2017, which is significantly higher than the unemployment rate in Germany (5.7%).
After overcoming the division of the city, the Berlin economy was in a state of upheaval, which was mainly reflected in the declining development of the industrial sector, which initially could not be compensated by the growth of the service sector. After economic output fell almost continuously from the mid-1990s, the gross domestic product increased by 9.1% from 2010 to 2015 (2017: 3.1%) (Germany-wide: 7.9%; 2017: 2.2%). The main growth engine is the service sector, in particular the areas of tourism, health and social services and education. The favorable economic development in Berlin also caused the number of employees to rise. The number of people in employment increased steadily between 2006 and 2017 (2017: 1,955,500).
In 2017, only 11.3% of the workforce, including 6.0% in the manufacturing industry, was active in the manufacturing industry, including the construction industry (around 30% in 1991). In 2017, around 117,900 people were employed in the manufacturing sector. The most important industries in terms of number of employees were: electrical equipment (10.6%), computer equipment, electronic and optical products (9.9%), mechanical engineering (8.0%), pharmaceutical products (7.6%), Food and feed (7.3%).
In the service sector, the state sector has an above-average weight, among other things. by the highest federal authorities (German Federal Pension Insurance, Federal Printing Office, Federal Institute for Materials Research and Testing). Berlin is important as an international congress and trade fair city (with exhibition grounds at the radio tower). The best-known events that take place regularly are the International Green Week, the International Tourism Exchange, the IFA (formerly the International Radio Exhibition), the International Aerospace Exhibition (ILA) and the InnoTrans (Trade Fair for Railway and Transport Technology). The International Congress Center (ICC) has been available for congresses and meetings since 1979. Tourism has increased steadily in recent years. In 2017, 13 million visitors came to Berlin, of which 5.1 million were foreign visitors. The number of overnight stays was 31.2 million.
In 2017, a total of 88.7% of the workforce were employed in the service sector (trade, hospitality and transport; financing, rental and corporate service providers; public and private services). This is the highest proportion among the German federal states (national average: 74.5%). Public and private service providers accounted for the largest share of gross value added with 31.3%, followed by financing, rental and corporate service providers with 30.6% and retail, hospitality and transport with 22.8%.