Economic Development News & Insight


The Higher ED Blog: How to Thrive as a Shrinking City

Connor Renouf / June 19, 2017

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The Higher ED Blog: How to Thrive as a Shrinking City

Depopulation, de-industrialization, and decline are words an economic developer never wants to see describe their community.  When they do, questions are always asked, fingers pointed, and reorganizations attempted in order to quickly reverse course and return to positive economic growth.

Despite what we may tell ourselves about today’s economy, decline abounds. Sure, today’s global economy has created lots of winners, from New York to Tokyo to Paris, but it’s also created lots of has-beens: places like Detroit, Youngstown, Flint, and Gary.  In short, the forces that make some destinations highly competitive are the same ones sucking others dry.

How we have dealt with decline has varied based on place, but usually involves denying or ignoring the problem. The relationship between success and unabated economic growth in cities is deeply ingrained into our understanding of development, making it difficult for declining places to face the reality of slow or no growth. Over time, some cities come to accept their condition, and indeed even embrace it, allowing them to better address the preconditions that led to the shrinking of their community. This is the focus of my own research over the past year: urban decline in Eastern Germany.

The Importance of History

In order to understand the plight of shrinking cities, it is key that we acknowledge the historical events that led to their present condition. Failing to understand the history of a place can lead to a failure to properly engage with the issues facing it. Likewise, we can open ourselves up to committing the same mistakes that led to a city’s current situation.

East German Shrinking Cities

It may surprise you, but Germany has emerged as a focal point of the shrinking city issue. Hundreds of East German cities have shrunk considerably since the 1990s—Hoyerswerda in Saxony, for example, has lost over half of its population in 25 years! As a result, many urban areas across Eastern Germany have seen an oversupply of housing, industrial structures, and other buildings. The German government’s initial reaction to the issue was casual ignorance: they could see what was happening, but were reluctant to acknowledge the issue because of its political sensitivity. The German government firmly held to the belief that growth would naturally return.

What Went Wrong

There is no single cause for the shrinking city in Eastern Germany, but overall causes of decline can be traced to a convergence of many historic as well as present events. Decades of Cold War division and subsequent development under entirely different ideological and economic systems meant that, when reunification was achieved in 1990, one side was going to fare much worse than the other. In the spirit of Jeffery Sachs’ economic shock therapy, Eastern Germany was opened up to capitalism at a pace unmatched in history. This disruption was further compounded by ill-advised currency reevaluations that favoured the West and a quick selling off of Eastern state assets. As the wealth and jobs rapidly evaporated in Eastern Germany and concentrated in Western Germany, the people followed. The end results were cities that had by the 2000’s witnessed the rapid loss of their industrial economies and the reversal of their population growth from positive to negative. Finally, a massive and costly suburban building program in the East further drained the city centre of its populations, with residents retreating to outlying areas.

Development from Decline

In order to get some benefit from decline, cities and communities need to do more than rely on simple land clearance to get the ball rolling. Unique solutions to the economic development woes of shrinking cities have already been emerging both in Europe and in North America.

Detroit has long been the poster child for shrinking cities in the United States. Once a city of 1.8 million, Motor City now houses fewer then 700,000 people and the resulting vacant land covers more area than the city of San Francisco. Taking advantage of this empty space, a new type of business has cropped up: urban farming. Organizations such as Keep Growing Detroit, the Michigan Urban Farming Initiative, and Hantz Woodlands now cultivate several acres of farmland within Detroit, and have plans for further expansion. These organizations have come to fill an important role in building new community pride in the city and supplying residents with fresh food they’d normally have to leave the city to find. Michigan has taken notice too: the state is now promoting urban farming as an example of economic resiliency and innovation in the face of constant change.

Other cities, such as Youngstown, created economic growth plans explicitly based on the concept of adapting to the city’s new reality, setting realistic economic goals that properly manage the decline and concentrate efforts on the most economically viable areas of the city. While success in some areas remains elusive, overall positive improvements speak to the benefits of planning in this manner.

How has Eastern Germany faced it? Now past the acceptance stage, German planners are working hard to put a positive spin on decline. These economic development plans have manifested themselves physically in the creation of more public green space and more pedestrian friendly connections across the city leading into their historic core areas. Institutions formerly suited to growing cities, such as daycares and after school centres, are being converted into senior centres and community space. At the same time, these plans are left open for public consultation with regards to their improvement. Despite these changes, however, policies demonstrate a continued emphasis on firm attraction and a lack of business and entrepreneur support, making it difficult to compete with the economic strength of Western Germany.

Eastern German cities are also reengaging with their traditional, pre-industrial economies and identities. Occurring in tandem with demolition policies, cities such as Greifswald, Witenberg, and Gorlitz have moved away from industrial development. Greifswald is now the Luther; Witenberg is now University and Hanseatic; and Gorlitz, the City of Culture, Edcucation and Business. By reorienting their economic development and branding to line up with key parts of their history, these cities have been able to stabilize their populations and redevelop along new paths. Similar strategies could be applied to other declining or disadvantaged communities across the developed world.

While many of these proposals are merely in the early stage and their full economic impacts  are not yet fully understood, they are encouraging examples of thriving, if shrinking, cities. Instead of fearfully avoiding or ignoring the reality of decline, we need to accept it and work to identify unique solutions that can turn what many see as a negative for a community into a positive.


I would like to thank Mark Seasons for all the guidance and support given to me in the process of completing this research. I would also like to thank him and Markus Moos for making my thesis defence a positive experience and for all the feedback on my work they provided.


About the author

Connor Renouf is a recent graduate of the University of Waterloo’s Economic Development Program. He also holds a Bachelor’s Degree in International Development. One of his primary interests in research is emphasizing the historical context of development issues, allowing for a stronger understanding of the problem at hand. His research interests include world economic history, economically disadvantaged regions, the use of public funds in development, and densification.

About the series

Higher ED: Insights for the Next Economy is a platform for students, guest speakers, staff and faculty of the University of Waterloo’s professional and graduate economic development programs to share knowledge with the field at large. The series takes works destined for an academic audience and reworks them into a fresh, easy-to-digest blog article.

Established in 1987, the Master of Economic Development and Innovation (MEDI) is one of the only graduate programs in Canada focused exclusively on economic development. Students learn economic development theory and practice, and are exposed to leading edge knowledge, tools, and approaches to address contemporary challenges in cities and communities across Canada and internationally.

The Economic Development Program is a nationally-accredited provider of professional training. It delivers certification programs and seminars that offer a deep understanding of the Canadian context in a convenient block format. Peer learning is combined with informative lectures and practical case studies to provide dynamic instruction that is beneficial for junior and senior-level practitioners.

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