The boroughs of Friedrichshain (former part of East Berlin) and Kreuzberg (former part of West Berlins) are two inner city areas with a total of 243.000 inhabitants and a total surface of 20,16 km² that have merged on January 1^st, 2001 in the framework of Berlins administration reform to the new joint government district of "Friedrichshain- Kreuzberg".

The new district is characterised by ongoing de-industrialisation, high unemployment and extended poverty. Its unemployment rate of 23,5 % in December 1999 was the highest of all new districts. The average net income of 2.300.- was the lowest of all districts. The demographic structure is marked by a high rate of immigrants, students and artists. The built environment is characterised by numerous courtyards and the typical mixture of living and working areas.

Small and medium sized enterprises and service companies constitute the core of the local economy. The remaining craft and manufacturing businesses (295 enterprises with 10.834 employees and 441 Mio DM of sales in 1998) are concentrated mainly in the western part of the district, the borough of Kreuzberg. With over 1.400 businesses working in the manual trades, Kreuzberg is top of the list in Berlin. In the manufacturing industry (mainly investment goods production) there is a network of specialist small-scale businesses closely-co-operating with each other.

Some of these have specialised in the innovative branches of environmental technology and ecological building/restoration. Some are social enterprises using subsidised schemes for job creation in the environmental sector and projects of sustainable urban development. Some are already operating internationally or in the framework of European support programmes.