18 Feb 2013

A system of  financial transfer payments is employed in the Federal Republic of Germany as a means of compensating for substantial differences in the financial power of the federal states (Länder). For the year 2012, only three federal states, all located in southern Germany were net contributors while the remaining thirteen states were net recipients of funds under this mechanism. Two of the contributor states (Geberländer), Bavaria and Hessen have announced their intention to mount a consitutional challenge, arguing that the receiving states are not doing enough to cut back on public expenditure. This assertion is of course viewed very critically by the other state governments making it a topic of heated debate.

Länderfinanzausgleich

(source: Mitteldeutscher Rundfunk 5.02.2013, Notes: Federal states shaded 'red' are receivers of funds under this mechanism whereas those in blue are contributors. Mio = million, Mrd = thousand million - German Milliarden)
This debate raises issues of inter-regional solidarity and unity -what at the European level is referred to as territorial cohesion. Perhaps, not surprisingly, however, the current debate in Germany does not make reference to the concept of territorial cohesion and employs predominantly simplistic state-centric concepts of spatiality in its discourse. The prime minister of Saxony-Anhalt, however, pointed to the methodological territorialism of the current debate, noting that the simple black/white binary of contributing and receiving states obscured the reality of economic flows, which are substantially influenced by cross-boundary commuting flows (in different words, of course).

There has, been signficant debate and policy development within specific academic and policy communities on the role of spatial policy and planning in contributing to territorial cohesion and the German constitutional principle of equality of living conditions. Here, the concept of supra-regional partnerships of responsibility introduced in 2006 is particularly noteworthy. These large-scale cooperation areas,  each cross the boundaries of a number of federal states and are in part an attempt to identify functional partnership areas of cooperative responsibility or solidarity. Indeed, they may be viewed as counterbalance to the previously dominant focus in German spatial policy on metropolitan regions as the motors for economic growth and regional development. John Harrison and Anna Growe provide a detailed English-language account of these specific elements of federal spatial policy in Germany, focussing on the extent to which they embrace relational concepts of place.

German metropolitan regions and to a lesser extent supra-regional partnerships include some financial measures, often in the form of development funds which can support the development of infrastructure or networking capacity development projects. These measures focussed on cooperative regional development and in effect, territorial cohesion, in recent years have tended to play a secondary role, in comparison with the dominant economic profiling and competitiveness agendas of the metropolitan regions.

It is evident that mainstream debates concerning inter-regional financial statements lack spatial nuance and suffer from (federal)state-centric methodological territorialism.  The concept of territorial cohesion, has influenced federal spatial policy but the link with debates and policies regarding imbalances in the economic strength of German regions and federal states and associated compensatory financial transfers, appears to be missing.

This post was originally written for the Regional Europe blog.