OECD Regional Outlook 2016

OECD Regional Outlook 2016

Productive Regions for Inclusive Societies You do not have access to this content

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Author(s):
OECD
11 Oct 2016
Pages:
304
ISBN:
9789264260245 (PDF) ; 9789264260290 (EPUB) ;9789264261372(print)
DOI: 
10.1787/9789264260245-en

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Regions and cities are where the effects of policies to promote economic growth and social inclusion are felt in day-to-day life. The OECD Regional Outlook 2016 examines the widening productivity gap across regions within countries, and the implications of these trends for the well-being of people living in different places. It discusses how structural policies, public investment and multi-level governance reforms can help boost productivity and address inclusion. Drawing on a survey of OECD countries, the Outlook  highlights country practices in regional, urban, and rural development policy that guide public investment. The Special Focus Part II on rural areas looks at different types of rural area and their productivity performance trends, and suggests that countries move towards a “Rural Policy 3.0”. The Policy Forum on Regions and Cities: Implementing Global Agendas includes chapters by many leading global organisations on how regions and cities can be instrumental in achieving the targets of agreements such as the Paris Accord and the Sustainable Development Goals.  Individual country profiles provide an overview of regional, urban and rural development policies as well as performance in terms of productivity and well-being among different regions.

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  • Foreword

    This third edition of the Regional Outlook continues to emphasise the untapped growth, productivity and well-being potential associated with cities and regions. The first edition of the Regional Outlook in 2011 identified at least two major trends requiring a better integration of the subnational perspective in OECD policy agendas. One trend was the persistent low productivity growth in most OECD countries. To tap into broader sources of productivity gains, the Regional Outlook 2011 was advocating a more integrated strategy, consolidating economy-wide structural policies by complementing them with place-based policies. A second trend is the observed disconnect between the quest for productivity on one side, and individual well-being on the other, that has generated the need to consider the three pillars of efficiency, equity and environmental sustainability. Subsequently, the Regional Outlook 2014 reckoned that well-being is intrinsically local and needs to be constructed by aligning policies from the top to the relevant scale: the places where people live and work.

  • Reader's Guide

    Typology of regions with respect to productivity

  • Executive Summary

    Regions matter for building productive economies and inclusive societies. This third edition of the OECD Regional Outlook shows that while gaps in GDP per capita across OECD countries have narrowed over the last two decades, within their own borders countries are witnessing increasing income gaps among regions, cities and people. Leading regions and cities are now competing more with global peers than with others in the same country. There will always be interregional gaps, but those regions lagging behind have opportunities to catch up in terms of social and economic development. By helping to fuel the catching-up machine, countries can reap a double dividend of both increased aggregate productivity and inclusion.

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  • Expand / Collapse Hide / Show all Abstracts The place-based dimension of productivity and inclusion

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    • Regional productivity gaps and their consequences

      While there will always be some form of interregional gaps, those regions lagging behind should have opportunities to catch up in terms of social and economic development. This chapter considers the implications of the OECD trends of low levels of national labour productivity growth for different types of regions, including the differences between regions that are catching up to the frontier and those that are falling behind. It explores the dynamics of regions in the OECD and the extent to which certain regions are, or are not, catching up. It then addresses the implications of these trends for the well-being of people living in different cities and regions, as the regional and local level are at the nexus of productivity and inclusion. Finally, it outlines the three broad types of public action that can be used to boost productivity in lagging regions and address inclusion. They are: structural policies, public investment (including through regional development policies), and multi-level governance reforms.

    • Regional development: Policies to promote catching up

      The purpose of this chapter is to understand current regional development approaches among OECD countries to help lagging regions catch up and improve the quality of life for residents in all regions. It reviews the objectives and policy tools for regional, urban and rural development as well as trends in country practices and the nature of recent changes. It then explores the governance arrangements to underpin better policies, such as the organisation of such policies at national level, the role of national networks of regional development agencies, and reforms of regions in terms of competencies and administrative borders.

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  • Expand / Collapse Hide / Show all Abstracts Special focus: Rural areas – Places of opportunity

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    • Understanding rural economies

      This chapter first considers the definition of rural, with a discussion of the characteristics of low-density economies and methods to capture some of those characteristics in the definition of rural regions. The second part of the chapter analyses key trends in rural regions, including trends in productivity, gross domestic product, employment, and demographic change, using the OECD extended typology that allows for the classification of rural regions according to their proximity to cities. There is a focus on the role of the tradable sector for productivity performance and the resilience of rural regions to the effects of the recent crisis.

    • Rural Policy 3.0

      This chapter describes the Rural Policy 3.0. It argues that a key objective of rural policy should be to increase rural competitiveness and productivity in order to enhance the social, economic and environmental well-being of rural areas. Within this approach, policies should focus on enhancing competitive advantages in rural communities and should draw on integrated investments and the delivery of services that are adapted to the needs of different types of rural areas. The Rural Policy 3.0 describes a partnership-driven approach that builds capacity at the local level to encourage participation and bottom-up development. Practices from select OECD countries are drawn on to illustrate this approach.

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  • Expand / Collapse Hide / Show all Abstracts Regions and cities implementing global agendas: A policy forum

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    • Investing in "voice" to implement global agendas

      The recently adopted global agendas, notably the Sustainable Development Goals (SDGs), the Paris Agreement of COP21, Habitat III, Financing for Development and the Sendai Framework, provide a vision for common values through a global governance system. This chapter raises questions about when and how localising these agendas makes sense to ensure that policy meets people’s expectations and needs by giving them a greater voice in the process and implementation. The chapter considers three questions: i) Are regions and cities indeed the places where policies and people meet? ii) Do regions and cities have the right tools and capacities to localise SDGs and other targets? and iii) How can national and subnational governments work better together, using a more structured engagement with people in the process?

    • A New Urban Agenda for the 21st century: The role of urbanisation in sustainable development

      This chapter discusses why urbanisation is a necessary tool for achieving the Sustainable Development Goals (SDGs). It proposes a strategic and pragmatic framework for how governments at all levels, across all regions, can activate a positive pattern of urbanisation to improve the lives and livelihoods of all human settlements. UN-Habitat is advocating for a transformative model of urbanisation in the New Urban Agenda (NUA), set for adoption at the United Nations Conference on Housing and Sustainable Urban Development (Habitat III) in Quito, Ecuador in October 2016. This chapter first offers an overview of trends and challenges for sustainable urbanisation, which provide the basis for understanding why a New Urban Agenda is needed. The second section explains how quality urbanisation and the role of cities are critical to achieving the aims of all post-2015 global agendas. The chapter concludes with a discussion on the strategic actions needed to implement the New Urban Agenda.

    • Financing subnational and local governments: The missing link in development finance

      Unlocking the potential of territories at the local level is key to financing the amount of investment urgently needed to reach the Sustainable Development Goals (SDGs) and to meet the needs of the population. The series of international debates on development are paying increasing attention to city-level development financing, but local authorities are still not recognised as central to the debate. Focus should be brought first on improving the mobilisation of local endogenous resources, through expanding local taxation and relying on land-based finance and taxation of economic activities to improve local fiscal autonomy. Then, guarantee mechanisms should facilitate the process of leveraging external resources, encompassing private finance, climate finance, and borrowing, to finance long-term infrastructures.

    • Cities and regions – Connected by water in mutual dependency

      This chapter argues that cities and regions have a crucial role to play in facing existing and future challenges of managing water – whether too much, too little or too polluted. While no blue-print exists on how water challenges are to be met, inaction is certainly not an option. On the contrary, there is momentum to move from vision to action towards the implementation of the global agenda to 2030, which aims, amongst other things, to ensure availability and sustainable management of water and sanitation to all. The chapter argues that there is room for better efficiency and inclusiveness when connecting between territorial scales and water boundaries, and across water-related policies. The OECD Principles on Water Governance provide a framework to set and implement water policies across levels of government that contribute to better lives.

    • United States rural policy: Increasing opportunities and improving the quality of life of rural communities

      United States rural policy seeks to mobilise the assets of rural areas for national prosperity and offer opportunities for greater quality of life across all rural communities. This chapter considers the diversity of rural places and how rural policy and other place-based approaches and bodies, such as the White House Rural Council, can contribute to their vitality. It further describes how several programmes and plans are being implemented to fulfil these goals, including: Promise Zones; StrikeForce Initiative; Partnership for Sustainable Communities; Local Food, Local Places; Community Economic Development approaches; Strategic Economic and Community Development; Investing Manufacturing Communities Partnerships, and rural elements of the Climate Action Plan.

    • Global dimensions of malnutrition: Territorial perspectives on food security and nutrition policies

      Despite impressive progress in reducing hunger and poverty, about 800 million people worldwide continue to suffer from undernourishment. Food insecurity and malnutrition are problems affecting rural areas in particular, as part of a pattern of deep-rooted spatial inequalities. Conventional sectoral agriculture and food policies often overlook such territorial disparities and, consequently, are unlikely to suffice to meet the sustainable development goal of ending hunger and achieving food security for all by 2030. This chapter argues that food security and nutrition policies would greatly benefit from a territorial approach. A territorial approach to food security and nutrition goes beyond a simple rural-urban dichotomy. The development of strong and mutually reinforcing rural-urban linkages is important for the development of agriculture and food systems at large, but will not be effective if it does not consider competing uses for land, water and other natural resources and plans infrastructure and basic services within and between different territorial contexts.

    • Response to the Paris Climate Accord: Scaling up green projects from a bottom-up perspective

      The Paris Accord and the 2030 Sustainable Development Goals (SDGs) call for a massive scaling up of green projects. However, such infrastructure investments are not achievable without private financing. Over the last few years, R20 Regions of Climate Action has been working to address this gap by collaborating with the regional and local decision makers, technology companies and investors to develop bankable projects in different areas of the green economy from energy generation to waste management. This chapter highlights several programmes and financial instruments, including novel pre-investment facilities (PIF), being used to implement projects worldwide in support of these new global targets.

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  • Expand / Collapse Hide / Show all Abstracts Country profiles

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    • Australia

      Australia is a federal country composed of six states and two territories with a population of 24 million. Subnational governments are responsible for 46.4% of public expenditures, making it the 9th most decentralised country in the OECD with regards to public spending. It is the 3rd most urbanised country in the OECD. Currently two-thirds of the country’s population live in one of its six metropolitan areas. Urbanisation is increasing rapidly, with four of the metro areas belonging to the 60 fastest growing metros in the OECD. Residents of the metropolitan areas are the least exposed to air pollution among metropolitan areas in the OECD. Inter-regional disparities in terms of life expectancy are the 2nd widest in the OECD, standing at more than 6 years. The Australian Capital Territory performs best on this indicator and is among the top 10% of OECD regions, whereas the Northern Territory is in the bottom 25% of OECD regions.

    • Austria

      Austria is a federal country composed of 9 Länder with a population of 8.6 million. Subnational governments are responsible for 34% of public expenditure, ranking Austria the 14th most decentralised country in the OECD with regards to public spending. Around two thirds (65%) of its population is living in intermediate or predominantly rural areas, which is higher than in the majority of OECD countries.

    • Belgium

      Belgium is a federal country with a population of 11.2 million. Subnational governments are responsible for 42.8% of total government spending, ranking it the 11th most decentralised country in the OECD with regards to public spending. However, in terms of public investment, Belgian subnational governments are responsible for almost 90%, a share that has increased since 1995 and is the 2nd highest share in the OECD. With 5.3 municipalities per 100 000 inhabitants, Belgium is in the middle range of the OECD in terms of subnational administrative fragmentation. It is the 5th most urbanised country in the OECD, with 68% of people living in predominantly urban regions generating 75% of the country’s GDP.

    • Canada

      Canada is a federal country composed of 10 provinces and 3 territories with a population of 35.9 million. Canada is the most decentralised country in the OECD with regards to public spending, with subnational governments responsible for almost 80% of total government expenditure. It is the 8th most urbanised country in the OECD as 57% of its population lives in predominantly urban areas.

    • Chile

      Chile is a unitary country with a low degree of decentralisation and a population of 18 million. The GDP per capita, at around USD 22 200, is only 54% of the OECD average, the 3rd lowest among OECD countries. With 1.9 municipalities per 100 000 inhabitants, Chile is the 8th least administratively fragmented country in the OECD. Inequality among Chile’s small regions (TL3) is the highest in the OECD, as measured by the Gini index, even though the gap has declined since 2000. Chile performs poorly on gender equality indicators. Chile has the widest gender gap in the OECD in life expectancy, with women living longer than men and the 3rd highest gender gap in participation rates, with men outperforming women in terms of being active in the labour force.

    • Czech Republic

      The Czech Republic is a centralised unitary country with a population of 10.5 million. It is the 8th least urbanised country in the OECD, as only 24% of its population live in predominantly urban regions. More than 90% of those living in a functional urban area are exposed to high air pollution levels. With 61 municipalities per 100 000 inhabitants (6 258 municipalities), the Czech Republic is the most administratively fragmented country in the OECD.

    • Denmark

      Denmark is a unitary country of 5.7 million people. Its subnational governments, mostly municipalities, are responsible for 64.3% of public expenditures, ranking it the 2nd most decentralised country in the OECD with regards to public spending. It is the 5th least urbanised country in the OECD with only 22% of its population living in predominantly urban regions. It is also among the least fragmented, with 1.7 municipalities per 100 000 inhabitants (ranked 6th least fragmented), in part due to the 2007 local government reform.

    • Estonia

      Estonia is a unitary country with a population of 1.3 million. Subnational governments are responsible for 24.1% of government expenditure, ranking Estonia the 11th most centralised country in the OECD with regards to public spending. It is the least decentralised country in the OECD with regards to taxation, as subnational tax revenue is only 1.6% of general tax revenue. Estonia is only moderately urbanised, with 43% of its population living in predominantly urban regions. Over the last decade, the share of the population in predominantly urban areas has increased at the fastest pace in the OECD. Estonia’s predominantly urban regions are producing 61% of Estonia’s GDP.

    • Finland

      Finland is a unitary country with a population of 5.5 million. Subnational governments are responsible for just over 41% of public expenditures, ranking Finland the 12th most decentralised country in the OECD with regards to public spending. Subnational governments in Finland are responsible for a wide range of policy areas in terms of spending, the main areas being education, health and social protection. Finland is in the lower range of the OECD in terms of urbanisation, as only 29% of its population live in predominantly urban regions. Finland was one of the OECD countries where the share of the population living in remote rural regions has decreased the most between 2000 and 2014.

    • France

      France is a unitary country with a population of 66.5 million. Subnational governments are responsible for only 20.5% of public expenditures, ranking France the 13th least decentralised country in the OECD with regards to public spending. The country is in the lower half of OECD countries in terms of urbanisation, as only 35% of its population are living in predominantly urban areas. With 35 885 municipalities, France alone accounts for 27% of the OECD’s total number of municipalities. Half of France’s municipalities have a population of 435 inhabitants or below, the 2nd lowest median size of municipalities in the OECD. Inter-municipal organisations, which in the future will have larger scale, help compensate for the large number of municipalities.

    • Germany

      Germany is a federal country with a population of 81.6 million. Its subnational governments are responsible for 47% of public expenditures, ranking Germany 8th in the OECD in terms of decentralisation with regards to public spending. Around 42% of Germany’s population lives in predominantly urban regions, where 63% of the GDP is produced. More than 90% of Germany’s population in metropolitan areas was exposed to high levels of air pollution. Between 2000 and 2013, predominantly rural regions outperformed predominantly urban regions in terms of GDP growth.

    • Greece

      Greece is a unitary country and the most centralised in the OECD with regards to public expenditures. Out of a population of 10.9 million, around 46% lives in predominantly urban regions. The Attica region, which includes Athens, contributed 40% of the country’s GDP growth between 2000 and 2013.

    • Hungary

      Hungary is a centralised unitary country, with subnational governments responsible for 15.8% of public expenditures. It is the 4th least urbanised country in the OECD, with only 18% of its 9.8 million people living in the predominantly urban regions that generate 38% of GDP. Hungary had the 6th largest decline in the share of its population living in rural remote regions.

    • Iceland

      Iceland is a unitary country, with almost 30% of its public expenditures conducted by its subnational governments (middle range in terms of public spending decentralisation). Iceland has a population of 330 000. Between 2008 and 2014, Iceland’s subnational governments significantly cut back their investment (-10 percentage points), making it the 2nd sharpest fall in subnational investment in the OECD. With 64% of its population living in intermediate regions, Iceland is one of the least urbanised countries in the OECD. Nevertheless, predominantly rural regions are losing population: 40 out of 10 000 people moved away from Iceland’s rural areas from 2011-13, the 2nd highest rate in the OECD.

    • Ireland

      Ireland is a unitary country (with two jurisdictions) and a population of 4.6 million. With only 9.4% of its public expenditures conducted by subnational governments, it is the 2nd least decentralised country in the OECD with regards to public spending. It is also in the lower range of the OECD in terms of urbanisation, as only 28% of its population is living in predominantly urban areas.

    • Israel

      Israel is a unitary country with a population of 8.4 million. Its subnational governments are responsible for 13.4% of public expenditures, ranking Israel the 8th least decentralised country in the OECD. Israel’s productivity is below that of the OECD average. Between 2007 and 2014, Israel’s subnational governments increased their investment at the third fastest rate in the OECD, at 6% per year.

    • Italy

      Italy is a unitary country with a population of 60.7 million. Subnational governments are responsible for almost 29% of public expenditures, ranking Italy 19th in terms of decentralisation in the OECD, with regards to spending. Italy is moderately urbanised, as 37 % of the population lives in predominantly urban areas. GDP growth is driven by the best performing regions. Between 2000 and 2013, over 80% of GDP growth was due to the performance of the top 20% fastest growing regions. Italy ranks 2nd in the OECD in terms of the share of its population 65 and over, behind Japan, and also has the second highest elderly dependency rate.

    • Japan

      Japan is a unitary country with a population of 126.8 million. Subnational governments are responsible for 40% of public expenditures, ranking Japan the 13th most decentralised country in the OECD. It is one of the most urbanised countries in the OECD, as 57% of its population live in predominantly urban areas. Tokyo alone was responsible for 40% of the country’s GDP growth between 2000 and 2013.

    • Korea

      Korea is a unitary country with a population of 50.6 million. Its subnational governments are responsible for 42.8% of public spending, slightly above the OECD average. On average, its municipalities are the largest, in terms of population size, within the OECD. It is also one of the most urbanised countries in the OECD, with 70% of its population living in predominantly urban areas.

    • Luxembourg

      Luxembourg is a unitary country with a population of almost 570 000. Luxembourg is the richest country in the OECD, with a GDP per capita of around USD 102 100, almost 2.5 times the OECD average. However, the statistics are inflated by the fact that much of the GDP is provided by cross-border commuters who contribute to the economy but do not live in the country. Luxembourg’s subnational governments are responsible for 11.5% of public expenditures, ranking the country the 5th most centralised in the OECD with regards to public spending. This is also due to the fact that there are only 2 administrative levels in Luxembourg: the national and the municipal level. Luxembourg has the highest level of public spending per capita (USD 41 581) and public investment per capita (USD 3 500).

    • Mexico

      Mexico is a federal country with a population of 121 million. Subnational governments are responsible for 50.6% of public expenditure, ranking it the 4th most decentralised country in the OECD in terms of public spending. However, Mexico has the lowest level of public spending and public investment per capita in the OECD. Around 46% of its population lives in predominantly urban areas.

    • Netherlands

      The Netherlands is a unitary country with a population of 16.9 million. Subnational governments are responsible for 30.1% of public expenditures, ranking the Netherlands 17th in the OECD in terms of public spending decentralisation. The Netherlands is the 2nd most urbanised country in the OECD, with 73% of its population living in predominantly urban regions. Between 2000 and 2013, the Netherlands was one of the few countries in the OECD where rural area economies (GDP) grew at a faster pace than urban regions.

    • New Zealand

      New Zealand is a centralised unitary country with a population of 4.6 million. Subnational governments are responsible for 11.3% of public expenditure, ranking New Zealand the 4th most centralised country in the OECD with regards to public spending. It is moderately urbanised, with 42% of its population lives in predominantly urban areas. The Auckland region contributed almost 40% of GDP growth between 2000 and 2013.

    • Norway

      Norway is a unitary country with a population of 5.2 million. Subnational governments are responsible for 33.8% of public expenditures, ranking Norway the 15th most decentralised country in the OECD with regards to public spending. It is in the lower third of the OECD on urbanisation, as only 24% of its population live in predominantly urban areas. Norway performs very well on gender equality in employment, as the average gender gap in labour force participation is a third of the OECD average with small inter-regional disparities on that indicator. At 8.2 municipalities per 100 000 inhabitants, Norway stands below the OECD average on administrative fragmentation. It is the 19th country on this indicator.

    • Poland

      Poland is a unitary country with a population of 38.5 million. It is the 16th most decentralised country in the OECD with regards to public spending, as subnational governments are responsible for 32% of public expenditure. Poland is in the lower half of the OECD in terms of urbanisation, as only 28% of its population live in predominantly urban regions. It is in the middle range of countries (17th) in terms of administrative fragmentation, with the average number of municipalities per 100 000 persons at 6.4.

    • Portugal

      Portugal is a unitary country with a population of 10.4 million. Portugal is the 6th most centralised country in the OECD with regards to public spending, as subnational governments are responsible for only 11.8% of public expenditures. Portugal is the 9th most urbanised country in the OECD, with 53% of the population living in predominantly urban areas. Administrative fragmentation is below average in Portugal, with on average only 3 municipalities per 100 000 inhabitants.

    • Slovak Republic

      The Slovak Republic is a unitary country with a population of 5.4 million. It is the 10th most centralised country in the OECD with regards to public spending, as subnational governments are responsible for only 11%. It is the 3rd least urbanised country in the OECD, with only 11% of the population living in predominantly urban regions. Bratislava was responsible for almost one third of the country’s GDP growth between 2000 and 2013. With 54 municipalities per 100 000 inhabitants, the Slovak Republic is the 2nd most administratively fragmented country in the OECD.

    • Slovenia

      Slovenia is a unitary country with a population of 2.1 million. Subnational governments are responsible for 19.7% of public expenditures, making it the 11th most centralised country in the OECD for public spending. No regions are classified as predominantly urban, and 57% of the country’s population are living in intermediate regions.

    • Spain

      Spain is a quasi-federal country with a population of 46.4 million in 2015. Subnational governments are responsible for 48.9% of public expenditures, making it the 7th most decentralised country in the OECD with regards to spending. Around 59% of Spain’s population lives in predominantly urban regions, making it the 6th most urbanised country in the OECD. With 17.8 municipalities per 100 000 inhabitants, Spain is the 9th most administratively fragmented country in the OECD.

    • Sweden

      Sweden is a unitary country with a population of 9.8 million. Subnational governments are responsible for 49.1% of public expenditures, making it the 5th most decentralised country in the OECD with regards to spending. It is the 6th least urbanised country in the OECD, with only 22% of its population living in predominantly urban regions. Sweden is one of the top performers in the OECD on gender equality, with a gender gap in labour force participation rates three times smaller than the OECD average. The worst performing Swedish region has only half the gender gap in participation compared to the OECD average. It also has the smallest inter-regional differences of gender gaps in life expectancy in the OECD.

    • Switzerland

      Switzerland is a federal country with a population of 8.3 million. Subnational governments are responsible for 61.5% of public expenditures, making it the 3rd most decentralised country in the OECD with regards to spending. Only around 38% of its population is living in predominantly urban regions. However, with 27.8 municipalities per 100 000 inhabitants, Switzerland is the 5th most administratively fragmented country in the OECD.

    • Turkey

      Turkey is a unitary country with a population of 77.5 million. Subnational governments are responsible for 10.7% of public expenditures, ranking Turkey the 3rd the most centralised country in the OECD with regards to spending. Around 33% of Turkey’s population live in predominantly urban regions, ranking Turkey the 13th least urbanised country in the OECD. With 1.9 municipalities per 100 000 inhabitants, Turkey is the 7th least administratively fragmented country in the OECD.

    • United Kingdom

      The United Kingdom is a unitary country of 65 million people composed of England and three devolved administrations: Scotland, Northern Ireland, and Wales. Only 25.2% of its public expenditures are carried out by subnational governments, ranking the United Kingdom the 14th most centralised country in the OECD on public spending. The United Kingdom is the most urbanised country in the OECD with 74% of its population living in predominantly urban areas.

    • United States

      The United States is a federal country with a population of 321.6 million. It is ranked 7th in the OECD on public spending decentralization, as 47.9% of its government expenditures are undertaken at the subnational level. Around 42% of the population is living in predominantly urban areas, placing the country in the mid-range among OECD countries.

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