The city is a former centre of textile production. When this industry left the area for cheaper production centers in South-East Asia, Enschede became one of the poorest municipalities in the Netherlands. The biggest challenge of the city is to prevent higher educated (wealthy) citizens from moving to the west (Randstad). Decades of renovation work in the city center have been carried out with the goal of making Enschede more attractive to this group.
Modern shopping centers and department stores that until recently were only found in much larger cities have been opened. Enschede is host to many yearly festivals and the Old Market Square is often the venue for events, live music and other activities on the weekend. After some hesitation on the part of the city council, Enschede was able to host Roze Zaterdag in the summer of 2004 which was a huge success. This not only gave the local economy a boost, but also drew positive attention to Enschede's gay community, the largest in the east of the Netherlands.
Like the German capital Berlin Enschede has a troubled urban economy, but is still home to a vibrant artistic scene. Also the city's laid-back attitude, by some attributed to the relatively low economic activity of its inhabitants (labour participation was about 57% in 2006) and the large numbers of students, artists and (semi-) government employees, make for a 'Berlinesque' atmosphere.
The proximity to Germany has, historically, been another major factor in the city's economic activity, ranging from the smuggling of coffee and tobacco in the 19th and 20th century, to large numbers of Germans, who visit the city's shops and (especially) the weekly markets. Therefore, most natives of Enschede speak German more or less fluently.
The city is co-operating with the nearby municipalities of Almelo, Borne and Hengelo as Netwerkstad Twente. A draft law plan to merge Enschede with Hengelo and Almelo was defeated in parliament under the influence
