Decarbonisation is unlike previous structural shocks because it is a planned policy objective. The shift away from emission-intensive industries is normatively charged and concentrated in regions whose specialisation has carried German growth for decades. Workers in those sectors see their skills devalued and their industries declared to have no future.

Perceived regional decline pushes voters toward right-populist parties, and recent evidence links exposure to the green transition to AfD support in Germany. When the parties designing the transition lose ground in the regions that have to live through it, they lose the political room they need to carry it through. Place-based investment is, in part, a response to that problem. It is meant to make public action visible and to signal that something new is being built where the old economic base is breaking down. Whether it works has been an open question.

What the German data show

In a new report for the Bertelsmann Stiftung, we assembled a county panel linking municipality-level state-election results in Bavaria, Hesse, and Lower Saxony to the disbursements of all 22 programmes under Germany’s Gesamtdeutsches Fördersystem (GFS), a coordinated bundle of place-based programmes launched in 2020. Our event-study compares within-county changes in funding intensity against changes in AfD vote share, with county and state-by-year fixed effects.

The evidence supports the idea that regional policy can have a stabilising effect — but only under specific conditions. Across the three main funding pillars of the GFS, infrastructure funding shows the most robust dampening effect on AfD support: a one-standard-deviation increase corresponds to a 0.23 percentage-point reduction. The economic-development pillar points in the same direction but is not statistically significant in aggregate. Civil-society and democracy programmes show no effect.

The estimated stabilising effect concentrates in regions under the greatest transition pressure. In counties with a high share of employment in emission-intensive industries, an additional €100 per resident in infrastructure funding is associated with roughly one percentage point lower AfD vote growth. Across all counties, the effect is smaller — around 0.6 percentage points — and in less exposed regions it disappears altogether.

Take the Cham district in Bavaria’s Oberpfalz. In 2022, the year of our snapshot of GFS disbursements, Cham received €281 per resident, almost all infrastructure, the highest figure among the three states we analyse. AfD support there grew by 4.9 points between 2018 and 2023. In its closest structural twin, Dillingen an der Donau, it grew by 7.8. The significant drivers are visible local projects: economic-infrastructure funding (GRW-Infrastruktur), broadband rollout, and Innovation und Strukturwandel, which links research to industrial transition. The programme-level pattern is consistent with stronger political feedback from visible, attributable public goods — projects that the state has actually delivered — than from transfers to firms. GFS funding is designed to flow to structurally weak regions, which also tend to show higher levels of AfD support; our analysis therefore tracks changes within the same counties over time, rather than comparing different regions.

The picture is not uniformly reassuring. Innovation programmes within the GFS — EXIST for academic spin-offs, ZIM for small and medium-sized enterprise research and development, and Unternehmen Region for research consortia — flow disproportionately to regions that are already strong. In fact, innovation funding is negatively correlated with transformation pressure: the state is funding the future where the future is already arriving, and not where it still has to be built.

This is exactly where the problem lies. Industrial heartlands receive support for physical capital but far less support for the knowledge base they will need for future growth. The GFS can, therefore, be read as politically stabilising in the short run. Over the longer term it risks leaving the regions under most pressure without the investment in new industries and skills they will need — precisely where political fragility is highest.

What it means for Berlin and Brussels

Two debates in Germany are currently live. The first is the redesign of the Gemeinschaftsaufgabe Verbesserung der regionalen Wirtschaftsstruktur (GRW), the federal-state framework that anchors most place-based spending. We have examined its electoral effects directly in earlier work. Its map of eligible regions is now being renegotiated, and our results argue for adding a forward-looking criterion of transformation pressure to the existing reactive measures of low income and unemployment. The point of the change is that the GRW should not only react to where the old economy is failing but help build the next one. An eligibility map that ignores where economic structure is under strain misses the places where regional policy appears to do most to slow right-populist gains.

The second debate concerns Germany’s new Sondervermögen für Infrastruktur und Klimaschutz. While not formally a regional-policy instrument, its projects will be geographically distributed. Their political return will depend on local visibility, on whether they reach regions under transformation pressure, and on whether the state actually delivers the outcomes it has promised. Where the projects go, how quickly they are built, and how visible they are locally, has not yet been decided.

There is also an important limit to the argument. Regional policy is not politically stabilising simply because money is allocated. What seems to matter is whether spending turns into visible infrastructure and demonstrated capacity to deliver on the ground. The politics of transition cannot be solved through compensation alone; it also depends on whether the state delivers concrete projects quickly, visibly, and in places where the old economic base is under strain. If voters do not see results, larger budgets buy little political trust.

For Brussels, the German findings raise a parallel question. Whether cohesion policy and the Just Transition Fund deliver a similar political dividend will depend on whether they translate into projects actually built. This means implementing projects visibly, in regions under genuine pressure, and on a timeline voters can register. Spreading funds thinly across all lagging regions is unlikely to have the same effect. At the same time, innovation budgets concentrated in already strong clusters risk leaving the regions facing the steepest transition without the investment in the industries and skills needed to replace what is being phased out.

Effect sizes are modest, AfD support has risen across Germany regardless of treatment intensity, and place-based policy will not reverse the political dynamics of the past decade. Nor is regional policy designed to influence elections, and it should not be evaluated mainly on that basis. Its goals are convergence and more equivalent living conditions. The narrower finding here is that when policy visibly delivers on those goals — especially through tangible infrastructure in regions under transformation pressure — right-populist gains tend to be smaller in those places.

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