What is Economic Development?

What is economic development? Its core purpose is to support businesses in establishing themselves in a given location (municipality), expanding their operations, and successfully conducting their activities there.

Every city, municipality, and district in Germany benefits from having businesses on site. Companies create and secure jobs for local residents and generate tax revenue for the municipality, thereby contributing to the overall economic development of the location.

For this reason, cities, municipalities, districts, and federal states aim to create the best possible conditions for businesses – both to retain existing companies and to attract new ones. This economic policy seeks to establish favorable framework conditions through legislation, planning, and strategic initiatives. The task of putting these political goals into practice is typically carried out by an economic development agency.

Such agencies can be structured in different ways: they may operate as a department within the public administration or as an independent organization. One example is Bremeninvest (WFB Wirtschaftsförderung Bremen GmbH), which is organized as a limited liability company owned by the City of Bremen.

What Does an Economic Development Agency Do?

The responsibilities of economic development agencies are wide-ranging and vary depending on the strategic priorities of the respective location. However, their overarching goal is always the same: to strengthen the local economy, safeguard existing jobs, and create new ones.
Using Bremen as an example, the following illustrates key areas of activity:

Activities Within a Location

Development of Commercial premises

Industrial, commercial, and service companies require space for offices, production facilities, warehouses, and factories. Economic development agencies ensure that suitable land is made available as commercial or industrial zones.

This land may be provided by the municipality itself or acquired from private owners. On behalf of the agency, the sites are prepared for business use – this includes building roads, preparing the ground for construction, and connecting the area to the public transport network.

Marketing commercial premises

Once developed, these sites are offered to companies looking to expand their operations. Economic development agencies not only handle the sales process but also actively seek potential buyers. These efforts help secure existing jobs, create new employment opportunities, and generate tax revenue as well as additional direct and indirect income for the city or the municipality.

Real Estate Development

The market cannot always provide suitable properties to meet demand. For example, a city may need small office spaces for start-ups, but renting out individual offices isn´t attractive for private investors due to limited profitability.

In these cases, economic development agencies will build or acquire properties themselves, rent them out, or sell them if investors later emerge. They also provide market overviews, engage with potential investors, and connect sellers with interested parties (see “Location Marketing”).

Business Support and Services

Supporting local businesses is a central task. Companies – whether newly established or long-standing – often have needs that go beyond purchasing or leasing space. These may include finding partners, obtaining building permits, handling administrative procedures, recruiting skilled workers, or addressing import/export issues.

In Bremen, Bremeninvest acts as an advisor and intermediary, either providing direct assistance or connecting businesses with the right people in institutions such as local government, (construction) planning departments, the local tax office, the Chambers of Commerce as well as other companies and networks. 

Supporting existing companies is equally important. Many commercial areas have evolved over decades. Their further development – through improved infrastructure, better amenities, and optimized layouts—is becoming increasingly important. In Bremen, this is addressed through initiatives such as commercial area management. Additional services, such as consulting on energy independence, are also gaining relevance.

Start-up Support

People who want to start a business face many questions: How do I register a business? Where can I find office space? Which legal structure should I choose? How do I secure funding?
Economic development agencies place great importance on supporting start-ups, as they are the entrepreneurs of tomorrow. In Bremen, various institutions provide knowledge, assist with applications, offer funding, and operate start-up centers that combine expertise with affordable space.

A distinctive approach in Bremen is the "Starthaus", which provides founders with centralized access to information, financing, funding programs, and partner networks. It also offers training seminars and personal guidance throughout the start-up phase. The Starthaus is an initiative of BAB – the Development Bank of Bremen, a wholly owned subsidiary of Bremeninvest. In addition, Bremeninvest operates start-up and technology centers.

Funding Programs

Business growth and innovation require investment – in buildings, machinery, processes, and personnel. Companies can access financing through banks, public funding programs, or a combination of both. Such programs exist at the state, federal, and EU levels and aim to support business development and strengthen economic locations. In Bremen, this role is fulfilled by BAB – the Development Bank for Bremen and Bremerhaven.

One example is the Research and Development Program (FEI), which provides small and medium-sized enterprises with low-interest loans and grants to support technological innovation, making the risks of new developments more manageable.

Sustainability Management

Climate change is becoming an increasingly important economic factor and is already affecting business models. Economic development agencies help companies adapt by organizing events, facilitating knowledge exchange, and advising on funding opportunities and climate protection measures.

They also implement sustainable land-use policies. In Bremen, for example, the Senate has adopted a strategy for forward-looking commercial areas that places particular emphasis on sustainability.

Sustainability goes beyond climate protection. Social responsibility and sustainable business practices are also gaining importance. Agencies support companies through consulting, networking, events, and funding guidance – promoting, for example, social enterprises, social start-ups, and economic models such as the common good economy.

Digitalization

Like sustainability, digitalization represents a long-term, resource-intensive transformation process. Small and medium-sized enterprises in particular often lack the necessary expertise, resources, or time.

Economic development agencies act as intermediaries by facilitating contacts, organizing events, and providing information on funding programs. In Bremen, this role is supported by initiatives such as the „Digitallotsen“ (digitalization guides).

Skilled Labor Support

Companies can only succeed if they attract qualified employees. Therefore, a location must be appealing not only to businesses but also to people. Economic development agencies serve as a link between employers and talent. They support recruitment through networking, events, and marketing campaigns promoting the location. In Bremen, for example, Bremeninvest initiated a networking event for HR professionals as part of the state’s skilled labor strategy. Another initiative is the Welcome Service Bremen (Willkommensservice Bremen), which assists companies in recruiting international professionals.

What an economic development agency does outside of the location

Attracting New Business

Another key responsibility is attracting new businesses. Companies may relocate or open new branches for various reasons such as expanding their market reach, accessing skilled labor, improving infrastructure, or securing more space.

Economic development agencies support this process by helping companies find suitable sites, secure financing, recruit staff, and navigate administrative requirements. This is particularly important for international investors, where language and cultural expertise are essential. Bremen, for example, has a strong focus on China, Turkey, and Vietnam.

Location Marketing

Location marketing is a fundamental aspect of economic development. Businesses must first become aware of a location before considering it. Agencies promote their locations through advertising, trade fairs, delegation visits, and network collaborations. They also provide data and analyses – such as real estate market reports –  to support investment decisions.

At the same time, they promote the location to residents and visitors, highlighting it as a place to live, work, and spend leisure time. After all, long-term economic success depends on people choosing to stay.

Marketing activities range from traditional media and online communication to operating city portals such as bremen.de and social media channels. Supporting cultural and sporting events is also part of the role, as these attract large audiences and enhance the city’s profile. Planning, organizing, and servicing conferences, trade fairs, and congresses is another important responsibility.

Tourism Promotion

In many regions – especially coastal or alpine areas – tourism is a key economic sector. Economic development agencies promote their regions through trade fairs and media campaigns, connect stakeholders, and develop strategies such as Bremen’s Tourism Strategy 2030+.

Tourist information is also part of Bremen’s economic development activities—referred to in the Hanseatic city as ‘Bremen Tourism’—and is responsible for core tourism services such as the development and implementation of tourism offerings, hotel bookings, advising interested visitors, and presenting available services.

What is Germany´s federal economic development agency?

In addition to local and regional agencies, Germany also has a national economic development organization: Germany Trade & Invest (GTAI). Its role is to promote Germany as a business location internationally and to support German companies operating abroad.

GTAI works closely with regional economic development agencies and organizes delegation trips and trade fair appearances.

Economic development without economic policies is simply impossible

The exact structure and focus of economic development always depend on a location’s economic policy. While agencies implement measures, they do not make fundamental regulatory decisions. That responsibility lies with political institutions such as parliaments and ministries.

For example, municipalities determine local business tax rates, which can significantly influence a location’s attractiveness. They also set property taxes and can shape economic development through funding programs, subsidies, loans, and public investment in infrastructure.

Finally, so-called “soft location factors” also play a crucial role – such as education, public transport, cultural and leisure offerings, and overall quality of life. Since companies depend on their employees, locations must provide an attractive environment in order to compete successfully for talent.