Munich, Germany, offers a striking study in contrasts: modern and traditional, conservative and liberal, industrial and artistic. One minute you’re arriving at one of the world’s sleekest and most modern airports; the next, you’re hoisting your stein, joining thousands of lederhosen- and dirndl-garbed Bavarians in a round of Ein Prosit at a 19th-century beer hall.

Germany’s third-largest city, with about 1.4 million residents, Munich is the capital of the southeastern state of Bavaria. In many ways, Munich is the polar opposite of the largest city, Berlin. Berliners, still shaping the city’s place in the world, celebrate hipness and edginess; in Munich, an established old-money mentality prizes substance over style.

Bavarians are said to consider themselves Bavarians first, Germans second, and they revere tradition. But Munich’s identity is defined by much more than an annual celebration of beer. It’s home to a dense concentration of technology firms — some 22,000 companies providing products and services in electronics; telecommunications; aviation; aerospace; and electrical, mechanical and automotive engineering. Two of the world’s largest insurance and financial firms, Munich RE and Allianz, and some 160 banking institutions are also based in Munich, as is one of the world’s largest integrated technology companies, Siemens. Information and computer technology companies are drawn to the area as well. Firms like Cirquent, a consulting company; Kontron, known for embedded computing; and app designers such as Holger Frank and Tobias Stoger may also be found here.

Munich’s 14 universities and institutes, where nearly 100,000 students are enrolled, fuel the city’s demand for innovation. Ludwig-Maximilians-Universität and Technische Universität München are ranked among Germany’s finest. Working with local firms and at the city’s six technology incubators, the scientific community is responsible for such breakthroughs as quantum communication, considered a solution to Alzheimer’s and other neurodegenerative disorders; synthetic RuBisCo, which promises to help minimize the effects of climate change and world hunger; next-generation antibiotics; and self-powering sensors for environmental protection, manufacturing and security.

The BMW Museum © Anton Chuiko | Dreamstime.com

One of the most established sectors in Munich is automotive manufacturing. Arguably the best-known local company is Bavarian Motor Works, more familiarly known as BMW, whose headquarters, original manufacturing plant, museum and research and innovation center all lie within the city. Rival automaker Audi also calls Munich home. Given its focus on cars, it’s no surprise the state of Bavaria was named a model region as part of a federal program to develop more electric-powered vehicles. The German government will continue to invest in the project through 2015. So far, Munich’s public transportation system has been testing hybrid buses, and BMW and Audi launched tests of electric cars. BMW is scheduled to roll out its first electronic car, the i3, in 2013.

Munich is by some measures the most powerful media city in Germany as well. It’s home to the Süddeutsche Zeitung, one of the country’s largest daily papers; ARD, the largest public broadcasting network; and a number of book publishers. Bavaria Film Studios, one of Europe’s largest, is found in a suburb of Munich.

One of Munich’s media empires, Hubert Burda Media, hosts the annual Digital–Life–Design conference, an invitation-only networking event that brings together global business, creative and social entrepreneurs; thought leaders; and investors. Recent DLDs have drawn the likes of Martha Stewart, Mark Zuckerberg and Arianna Huffington.

The city balances industry with diversions and a high quality of life. That lifestyle, in fact, attracted the attention of Monocle magazine, human resources consulting firm Mercer and other monitors, which routinely place Munich near the top on lists of most livable cities. Factors such as a diverse population (about 23 percent of residents are immigrants, higher than the national average), low crime and unemployment rates, high-quality housing and health care, and plentiful leisure options all boost the city’s livability scores.

Politically, Munich is something of an anomaly. Bavaria is historically one of the most conservative of the German states, but the city is governed by a liberal coalition of the Social Democratic party, the Greens, and the Rosa Liste (Pink List) gay rights party. Mayor Christian Ude, a Social Democrat, was elected in 1993 and has been re-elected four times since.

The outlook for Munich, especially compared to other European cities, remains bright. The German economy has long been among Europe’s strongest and has remained one of the few bright spots during the ongoing European debt crisis. So far, the country dodged the high unemployment and austerity measures seen in Spain, Greece and elsewhere.

By the end of 2012, however, some chinks were showing in the German armor. Unemployment remained under 7 percent — and typically Munich’s is lower than the national average — but the gross domestic product was expected to slow to 0.8 percent in 2012, down from 3 percent in 2011, according to the European Commission. German industries depend heavily on exporting, and the weak global economy is having a negative impact.

In response, German producers are tapping into alternative markets, especially among emerging economies. Exports to Brazil, Russia, India and China grew by nearly seven times between 1996 and 2011. Exports to the relatively healthy United States are on the rise as well. As a result, the nation’s official statistics office reported German exports through the third quarter of 2012 had risen 4.8 percent compared to the year earlier. China is expected to replace France as Germany’s biggest trading partner by 2030, according to economists at HSBC.

Things to Do in Munich

The Alte Pinakothek Museum © Dragan Jovanovic | Dreamstime.com

Munich is arguably best known as the birthplace of Oktoberfest, but whether you are visiting in the fall or at another time of year, there is no shortage of options for fun and exploring. Bavaria’s traditional wealth is on display across the city, perhaps no place more so than at the three Pinakothek museums. The Alte Pinakothek is one of the world’s oldest galleries and houses some 800 masterpieces dating from the Middle Ages to the Rococo period, including works by Rubens and Da Vinci. At the Neue Pinakothek, which focuses on 19th-century art, pieces by the likes of Monet, Degas and Renoir are the stars. The newest, the Pinakothek der Moderne, is Germany’s largest modern art museum and displays work by Picasso, Magritte, Kandinsky and Warhol. The three Pinakotheks all lie within walking distance of each other.

At the opposite end of the spectrum from the drunken revel that is Oktoberfest, Munich hosts an annual opera festival, and opera is serious business here. The plush National Theater, located in the center city, is home of the Bayerische Staatsoper, or Bavarian State Opera. Technology caught up with this time-honored art form: Founded in 1653, the company recently started streaming free online broadcasts of performances.

If you’re craving something a bit less high-brow, the nightly GOP Variety Theatre combines dinner with acrobatics, music and comedy — much of it in English or without need for translation — that captivates the audience of locals and tourists. Beware, the cast likes to draft audience members into the act, especially those seated near the stage.

For car buffs, the BMW Museum and BMW Welt, adjacent to the Olympic Park constructed for the 1972 Games, are must-visits. The exhibits of more than 120 BMW car, motorcycle and engine models trace the automaker’s history in the museum’s ultramodern quarters. Driving demonstrations, concerts and other events make BMW Welt a lively place, and the striking building itself is worth a closer look for architecture enthusiasts.

The Deutsches Museum is said to house the largest collection devoted to technology and science. Some 28,000 items, only a portion of the museum’s holdings, are on display. Highlights include the first motorized plane used by the Wright Brothers and a U1 German submarine. A companion space, Deutsches Museum Verkehrszentrum, is a sprawling complex tracing the country’s contributions to world transportation. Karl Benz’s first car is among the exhibits.

Soccer fans will want to check out Allianz Arena, the in-your-face domed stadium that hosts the soccer powerhouse FC Bayern Munich team as well as TSV 1860 München. The arena’s striking exterior lighting changes to reflect the current home team. You’ll most likely need help from a concierge or ticket broker to score a ticket, as matches are routinely sold out.

Swans at Nymphenburg Palace © Anyaivanova | Dreamstime.com

Five generations of rulers helped build the Baroque Nymphenburg Palace and Park, once the Bavarian monarch’s summer home, in the city’s western end. The group of buildings house period art and furniture; a standout room is the Gallery of Beauties, an impressive collection of women’s portraits commissioned by Ludwig I. The grounds are splendid as well.

Checking in with Dieter Reiter

Chief Executive and Governing Member of the Munich City Council

WHAT IS THE CURRENT ECONOMIC CLIMATE IN MUNICH AND GERMANY?
Unemployment in Germany is down to 7 percent, the lowest since German reunification. With an unemployment rate of about 4 percent, Munich is one of the best-performing labor markets in the European Union. Munich’s economy proved its resilience during the financial crisis, recovering within some months. It seems to be on a balanced growth path.

WHAT INDUSTRIES SHOW PROMISE AND WHAT IS CONTRIBUTING TO THEIR RISE?
Munich’s economy is characterized by its diversity, with a focus on technology-oriented companies. Exports of premium products from engineering, automotive, optical and medical technology, and the information and communication industry, play a major role, but our service industry is doing well, too. The most important success factor is the strong competitive position of our companies; their products are innovative and of high quality.

WHAT CHALLENGES DO BUSINESSES FACE IN MUNICH?
Despite the strong growth of our population, Munich’s companies are starting to worry about the local labor market and the availability of skilled employees. A consequence of Munich’s economic success and growth is a steep rise of prices, especially for housing. This might reduce Munich’s attractiveness as a place to live and work. The city runs a number of programs to give some relief to the tight housing market; nevertheless, it will be a main challenge for the next years.

HOW DID MUNICH DEVELOP AS AN ECONOMIC POWERHOUSE?
The economic development of Munich started relatively late in the post-World War II period. The absence of big traditional industries provided space for new technology-oriented sectors, and a number of important companies and institutions left Berlin for Munich. The high-tech orientation was favored by a strong public investment in the educational system, which combines in-firm training and vocational schools. Two of Germany’s leading universities are in Munich, and the city runs Germany’s biggest vocational school system. In addition, the city invested in improving the metropolitan infrastructure, the regional railway system, the metropolitan subway system, the new airport and the new trade fair.

BEER IS A SERIOUS BUSINESS LOCALLY. WHAT DO YOU RECOMMEND?
The Oktoberfest beer is one of the best drinks in the world. It is specially brewed for the festival by the six major Munich breweries and is quite strong. About 6 million liters are served every year. My advice? Drink that stuff carefully and keep your hands off the car keys.

Munich: Just The Facts

Time Zone: GMT +1 (+2 in summer)
Phone Code: Country: 49 City: 89
Currency: Euro
Entry/exit requirements: U.S. citizens must have a valid passport and may stay up to 90 days without a visa.
Official language: German
Key industries: Insurance, automotive manufacturing, pharmaceuticals, technology

Where to Stay in Munich

Cortiina Hotel Minimalistic feng shui design and a prime spot in Munich’s central historic district make up for tight quarters at this boutique property. Free WiFi is a big plus. Ledererstrasse 8 $$

Hotel Bayerischer Hof What do Neil Armstrong, Paris Hilton and the Dalai Lama have in common? They’ve all slept at this landmark hotel, a popular meeting spot for the city’s elite. Don’t miss the stunning Falk’s Bar. Promenadeplatz 2-6 $$$

Sofitel Munich Bayerpost Housed in Bavaria’s one-time royal post office, the neo-Renaissance exterior masks a slick, modern, French-influenced interior. The main train station is a stone’s throw away. Bayerstrasse 12 $$

Restaurants in Munich

Biergarten Chinesischer Turm For an authentic Bavarian meal, this spot set in Munich’s English Garden is a good place to sample soft pretzels, homemade dumplings, sausage and local brew. Englischer Garten 3 $$

Restaurant Dallmayr A very upscale component of a busy deli/coffee/market complex near the center of the city, this elegant, intimate and historic venue boasts a 700-bottle wine list. Dienerstrasse 14-15 $$$

Tantris This high-style, Michelin-starred spot serves luxury ingredients in imaginative ways. A five-course tasting menu runs about $200 a person; matched wines will set you back another $100. Johann-Fichte-Strasse 7 $$$

Munich Info to Go

Munich Airport (MUC), Germany’s second largest after Frankfurt, has something to suit any need. Rent a Napcabs pod for a snooze, or peruse the nearly 200 retail outlets, bars, restaurants and services on the premises. Airbräu, located in Terminal 2, serves a variety of beers and traditional Bavarian pretzels and sausages; it opens at 8 a.m. The brewery and outdoor beer garden is located in the Munich Airport Center between Terminals 1 and 2. When you’re ready to head into the city, about 18 miles away, the S-Bahn suburban trains (40 minutes, about $14) run every 10 minutes between the airport and the city’s Hauptbahnof (main train station). A cab takes the same time but runs about $65.