Economic development and industrial policy in Baden — Württemberg: Small firms in a benevolent environment

Abstract

Baden‐Württemberg is one of the strongest regional economies in Germany. Quite commonly, its success is explained by the technological competence of its industry, by the flexibility and ingenuity of its many small and medium‐sized firms, and by the impact of an active industrial policy. Today, however, the region has to cope with severe economic problems, and there is some evidence that these problems — at least partially — are due to its praised specific industry structure. On the other hand, there is reason to believe that the region will manage the required structural adjustment — not at least because of its well developed institutional profile. Thus, although the story of success of Baden‐Württemberg has to be revised somewhat, there are lessons to be learned with regard to industrial policy and the promotion of (regional) economic development.