The Ten Most Dynamic Cities

Rich and Richer

A BRIGHT SPOT IN THE GLOAMING, BUT FOR HOW LONG?

Half a percent growth would count as stagnation in many countries. But in Germany, where most cities are shrinking along with the overall population, thanks to a rock-bottom birth rate and barriers to immigration, it's a veritable boom. It also puts Munich at the head of a small elite of European cities growing against the receding tide, from Göteborg, Sweden, to Helsinki. Not that this is an entirely happy success story, for a receding tide leaves everyone scrambling just to stay afloat. "The competition between successful and less successful regions is getting more intense," says Reiner Klingholz, director of the Berlin Institute for Demographics and Development.

In Germany, the rich south is booming, while the rural east and blighted industrial west are emptying out. In this battle, says Klingholz, success feeds on success. Munich gets a big lift from "soft" lifestyle factors that attract young techies and entrepreneurs. Bavaria, the region surrounding Munich, likes to think of itself as Germany's California--a sunny and clean haven of high-tech firms and beer gardens. Germans consistently rank Munich as the place they'd most like to live.

Jobs are plentiful, a rarity in Germany's labor market, anchored by defense and electronics giants such as Siemens, which has been here since the 1950s. Today, Munich's 18,000 IT and bioscience companies represent Europe's biggest concentration of start-ups, according to Boston Consulting Group. Tourism and media are growing employers as well. The question, experts say, is how long any city can buck decline. As baby boomers start dying out--or retiring elsewhere--even Munich may eventually have trouble keeping its momentum.

Stefan Theil