Regions Matter

Regions Matter

Economic Recovery, Innovation and Sustainable Growth You do not have access to this content

Authors:
OECD
Publication Date :
24 Nov 2009
Pages :
198
ISBN :
9789264076525 (PDF) ; 9789264076518 (print)
DOI :
10.1787/9789264076525-en

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Why do some regions grow faster than others, and in ways that do not always conform to economic theory? This is a central issue in today’s economic climate, when policy makers are looking for ways to stimulate new and sustainable growth.

OECD work suggests that there is no one-size-fits-all answer to regional growth policy. Rather, regions grow in very varied ways and the simple concentration of resources in a place is not sufficient for long-term growth. This report draws on OECD analysis of regional data (including where growth happens, country-by-country), policy reviews and case studies. It argues that it is how investments are made, regional assets used and synergies exploited that can make the difference. Public investment should prioritise longer-term impacts on productivity growth and combine measures in an integrated way. This suggests an important role for regional policies in shaping growth and economic recovery policies, but also challenges policy makers to implement policy reforms.

Also available in: French
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Expand / Collapse Hide / Show all Abstracts Table of Contents

  • Mark
  • Acronyms
  • Introduction
    In the aftermath of the financial crisis, and against the background of a prolonged economic recession, the first priority for policy makers across the OECD and beyond has been to strengthen the world’s financial system. The next challenge is to support demand and employment creation during the recession in a manner that helps the subsequent recovery to be swift, smooth and durable, as exemplified by the current emphasis on green growth. Regional policies should contribute to this unfolding policy agenda. With this in mind, this report looks at patterns of regional growth across OECD countries, reviews the rationale for regional policies and explores current policy practice. The objective of the report is to identify ways that regional policies can be made more effective in meeting current and future economic, social and environmental challenges.
  • Summary of Key Policy Messages
    Regional policies are increasingly tested on their capacity to fuel growth, rather than simply reduce disparities. This is particularly true in the context of the economic crisis. But in order to play such a role, regional policies need to continue an ongoing process of reform.
  • Understanding and Explaining Regional Growth
    An understanding of how regional development policy can best support regional growth stems from an understanding of regional economic performance. OECD regions are very heterogeneous; each possesses very different levels of income, rates of employment, mixes of high and low productivity activities, internal and external assets, comparative advantages, stages of development and public policies. This chapter attempts to quantify disparities in regional economic performance, and to analyse why and how regions grow differently.
  • A More Effective Approach to Promoting Sustainable Regional Growth
    This chapter explores the current state of regional policies and highlights the key policy issues illustrated by examples of good practice from across the OECD. It discusses the evolution of regional policy in OECD countries and the "new paradigm". It then looks at the key components of regional policies: infrastructure, human capital development and measures to promote innovation. Finally, it discusses how the new approach to regional policy has influenced shifts in urban and rural development policy.
  • Policy Implementation and Governance
    This chapter discusses the various approaches that national and sub-national governments have adopted to improve co-ordination among levels of government for supplying services and infrastructure tailored to the specific needs and opportunities of sub-national territories. The impact of economic downturn on sub-national governments and the national stimulus packages reflect an accurate illustration of this topic. The crisis is having a large negative impact on most sub-national governments’ finances due a "scissor" effect: tax revenues falling sharply as a consequence of the fall in activity, while welfare expenditure soars. Regional authorities may consequently decide to reduce their investment spending. In order to avoid such a pro-cyclical behaviour, most national stimulus plans have a regional public investment support dimension. For this to be successfully implemented, effective co-ordination between levels of government is necessary. This chapter first examines the basic institutional and financial elements of sub-national authorities’ mandates and resources. It then focuses on the use of specific instruments for co-ordination and capacity building in regional policy: contracts, collaboration between municipalities and the use of performance indicators.
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  • Expand / Collapse Hide / Show all Abstracts Where Growth Happens: Patterns of Regional Growth – Country By Country

    • Mark
    • Australia
      Australia’s economy is significantly concentrated. Approximately 60% of the national GDP is produced by two of Australia’s eight TL2 regions (New South Wales and Victoria), and almost 40% of the national population live in two of Australia’s 60 TL3 regions (Sydney and Melbourne).
    • Austria
      Economic activity is more concentrated in Austria than on average in OECD countries; 10% of Austrian TL3 regions produce 44% of national GDP as opposed to 38% in OECD countries overall.
    • Belgium
      Economic activity in Belgium is not significantly concentrated in comparison to other OECD countries. Its geographical concentration index is among the lowest in the OECD and no single TL3 region produces more than 20% of the national GDP.
    • Canada
      In comparison to other OECD countries, economic activity is significantly concentrated in Canada where just one out of Canada’s 12 TL2 regions produces 35.5% of the national GDP (Ontario). Population is also significantly concentrated; according to the index of geographic concentration.
    • Czech Republic
      Economic activity in the Czech Republic is not significantly concentrated in comparison to OECD countries. Indeed, the Czech Republic’s index of geographic concentration at the TL3 level is the second lowest among OECD countries.
    • Denmark
      Disparities in GDP per capita among Denmark’s TL2 regions increased from 1995- 2006, although the increase was not consistent, with contrary movements in several years. Disparities reached their highest level in 2005, but since then regional differences appear to be declining again.
    • Finland
      Finland’s economy is significantly concentrated in comparison to OECD countries. According to the index of geographic concentration Finland’s economy is the fifth most concentrated at the TL3 region level. In fact, 35% of the national GDP is produced by one of Finland’s 20 TL3 regions (Uusimaa), and 57% of ational GDP is produced one (Etela-Suomi) of Finland’s 5 TL2 regions.
    • France
      Economic concentration in France resembles the OECD average, with 37% of national GDP produced by 10% of TL3 regions. Nonetheless, France’s TL2 capital region Ile de France produces a significant share of overall national output, 28% in 2007.
    • Germany
      Germany’s economy is slightly less concentrated than the OECD average according to the index of geographic concentration at the TL3 regional level. The top 10% of German TL3 regions produce 35% of national GDP as opposed to 38% for the OECD as a whole.
    • Greece
      The Greek economy is more concentrated than the OECD average, with 10% of Greek TL3 regions producing 43% of the national GDP. Moreover almost 40% of national GDP is produced by Attiki, one of Greece’s four TL2 regions.
    • Hungary
      Economic concentration in Hungary resembles the OECD average according to the index of geographic concentration at the TL3 region level. Nonetheless, the top 10% of regions produce a larger share of total national output (45%) than the OECD average (38%).
    • Ireland
      Economic concentration in Ireland among TL3 regions resembles the OECD average. Although concentration in GDP has increased over the past decade, the increase was lower than the average increase in 27 OECD countries.
    • Italy
      Economic concentration in Italy resembles the OECD average: 39% of national GDP is produced by 10% of TL3 regions. Approximately 31% of national GDP is produced by two TL2 regions Lombardia (20.6%) and Lazio (10.2%).
    • Japan
      Japan’s economy is slightly more concentrated than the OECD average, with 40% of national GDP concentrated in 10% of TL3 regions as opposed to 38% in the OECD overall.
    • Korea
      Korea’s economy is significantly concentrated displaying the fourth highest index of geographic concentration of GDP among TL3 region in OECD countries. More than 40% of the national GDP is produce in only two (Seoul and Gyeonggi) of Korea’s 16 TL3 regions.
    • Mexico
      Mexico’s economy is more concentrated than the average in OECD countries; approximately by 30% more according to the index of geographic concentration among TL2 regions. Moreover, more than one third (32%) of national GDP is concentrated in only two (Mexico and Distrito Federal) of Mexico’s 32 TL2 regions.
    • The Netherlands
      Economic concentration in the Netherlands is not significantly concentrated in comparison to OECD countries. According to the index of geographic concentration the Netherland’s economy is the third lowest concentrated among OECD countries. In fact only 26% of the national GDP is produced in 10% of the Netherland’s TL3 regions as opposed to 38% in the OECD.
    • Norway
      Norway’s economy is more concentrated among its TL3 regions than the average of OECD countries, approximately by 30% more according the index of geographic concentration among TL3 regions. Moreover almost one fourth (22%) of Norway’s GDP is produced in only one of its 19 TL3 regions (Oslo).
    • Poland
      Poland’s economy is less concentrated than the OECD average according to the index of geographic concentration among TL3 regions. Nonetheless close to one-fifth of the national output (16.8%) is produced by the capital TL2 region Mazowiekie, one of Poland’s 16 TL2 regions.
    • Portugal
      Portugal’s economy is very concentrated. According the index of geographic concentration in GDP it ranks heights among OECD countries. Moreover, 66% of Portugal’s GDP is produced in only two of its seven TL3 regions (e.g. Lisbon and Norte).
    • Slovak Republic
      Economic concentration in the Slovak republic is the least concentrated among OECD countries. According to the index of geographic concentration the Slovak Republic’s economy ranks the lowest among OECD countries and its population is also the least concentrated among its TL3 regions.
    • Spain
      Spain’s economy is more concentrated relative to OECD country where 10% of Spanish regions produce 44% of the national GDP as opposed to 38% in the OECD. Almost 60% of national GDP is produced in four TL2 regions: Cataluña (18.9%), Madrid (16.8%), Andalucia (13.5%) and Comunidad Valenciana (9.5%).
    • Sweden
      According to the index of geographic concentration applied to TL3 regions, Sweden’s economy is the second most concentrated among OECD countries. Almost 60% of Sweden’s GDP is produced in three of 21 TL3 regions (Stockholm, Västra Götlands and Skåne).
    • Switzerland
      Inequality in GDP per capita among Switzerland’s TL2 regions increased over the period 1980-2007. After fluctuating up to the mid 1990s, inequality increased steadily since 1995.
    • Turkey
      Turkey’s economy is more concentrated than on average in OECD countries. 10% of Turkish TL3 regions produce 54% of the national output as opposed to 38% in OECD countries.
    • United Kingdom
      The United Kingdom displays the third highest concentration of economic activity among TL3 regions within OECD countries according to the index of geographic concentration. The TL2 region of London alone produces almost one-fifth of United Kingdom’s GDP.
    • United States
      Economic activity in the United States (among TL2 regions) is more concentrated than in OECD countries where 39% of national GDP is produced by 10% of regions as opposed to 35% in OECD countries. In fact almost 30% of national GDP is produced by California (12.6%), New York (8.2%) and Texas (7%).
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