Regional Development Policies in OECD Countries

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28 Sep 2010
9789264087255 (PDF) ;9789264087224(print)

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Policy makers need both a handy reference guide to the regional policies of their own and other countries and a broader analysis of trends in regional policies, based on sound, comparable information. Regional Policies in OECD Countries responds to this need. It is the first systematic, comparative analysis of OECD countries’ regional policies.  

The report addresses fundamental regional policy concerns, such as: problem recognition; the objectives of regional policy; the legal/institutional framework; the urban/rural framework; budget structures; and the governance mechanisms linking national and sub-national governments as well as sectors.  

It begins with an overview of the regional policy today. This is followed by country profiles covering the 31 OECD members. The profiles share a common conceptual framework, allowing countries to see how their experiences measure up. The report also contains several annexes, which cover some of the countries that are candidates for accession to the OECD or with which the OECD has enhanced engagement. The annexes also cover the key topics of cross-border cooperation and trends in urban-rural linkages, especially efforts to control urban sprawl.  

The report will help countries to better understand regional policies and to formulate and diffuse horizontal policy recommendations. The analysis suggests an important role for regional policies in shaping sustainable endogenous development, in particular well-developed governance mechanisms to better respond to the different opportunities and demands of regions and to improve policy efficiency.  

This report is a unique source of regional policy information and of special interest to policy makers, researchers, and others engaging with regional development.

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  • Foreword/Acknowledgements
    Across the OECD, the globalisation of trade and economic activity increasingly tests the ability of regional economies to adapt and exploit or maintain their competitive edge. On the one hand, there is a tendency for performance gaps to widen between and within regions, and the cost of maintaining cohesion is increasing. On the other hand, rapid technological change, the extension of markets and the greater use of knowledge offer new opportunities for local and regional development. This requires further investment in the business environment, reorganisation of labour and production, and upgrading skills and environmental improvements. All of these trends are leading public authorities to reconsider their strategies. The role of policies aimed at improving the competitiveness of regions by promoting the valorisation and use of endogenous resources has been strengthened.
  • Regional Development Policy Trends in OECD Member Countries
    Chapter 1 summarises the trends of regional development policies in OECD member countries, beginning with problem recognition (the problems or challenges recognised by the country) and the objectives of regional development policies, followed by an overview of the legal and institutional framework including major policy tools, the urban/rural policy framework and the budget system. Finally, institutional aspects such as multi-level governance and horizontal governance are presented. The analysis suggests an important role for regional policies in shaping sustainable endogenous development, notably the need for well-developed governance mechanisms capable of better responding to the diverse opportunities and demands of different regions in order to improve policy efficiency.
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  • Expand / Collapse Hide / Show all Abstracts Country Profiles

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    • Australia
      The socio-economic profiles of Australian regions are very diverse and include: metropolitan regions; regional cities (both inland and coastal); industrial and mining towns (both metropolitan and regional), rural areas with major horticulture and viticulture industries and major tourism centres; rural areas in decline; remote indigenous communities; remote communities with fly-in fly-out workforce features; and very small communities with traditional industries.
    • Austria
      The regional problems in Austria are not very pronounced in comparison to other EU member countries. Whereas the traditional east-west disparities disappeared after the fall of the former Iron Curtain, there are some concerns regarding the persistent urban-periphery divide. With increased mobility, settlement structures are becoming more scattered, leading to urban-hinterland problems such as increased commuting and urban-rural sprawl.
    • Belgium
      The socio-economic differences between the three regions (Flanders, Wallonia and Brussels-Capital) have been changing over time. Broadly speaking, Flanders has moved from a rural and small-firms dominated economy to a technologically advanced leading region in Europe, though internal disparities can be observed at the sub-regional level. Congestion, the shortage of high quality industrial estates, urban sprawl, innovation and FDI attractiveness and embeddedness are also challenges.
    • Canada
      The vast size and economic and demographic diversity of the country has led to disparities in economic opportunities and outcomes across regions as well as between urban and rural areas. The existence of an extensive fiscal equalisation system supports the view that it is essential to provide a similar level of access to public services across the country. The geography of Canada also means that transport and communication infrastructures have been critical for the development of the different regions and notably for more remote areas.
    • Chile
      Regional disparities in GDP per capita are substantially higher than in most OECD member countries and are closely associated with large disparities in labour productivity. Territorial inequalities are also severe in access to education, research and innovation, and poverty levels, affecting the degree of regional competitiveness. Chile’s economy depends on a few resource-based sectors in a small number of regions.
    • Czech Republic
      The capital city Prague Region, together with St..edo..esky kraj (Central Bohemian Region), can be considered as integrated metropolitan regions and are the main engines of economic growth responsible for bringing the Czech Republic closer to the EU average.
    • Denmark
      Disparities in income between the capital area and the rest of the country are small by international standards, and have become even more uniform in recent years. While regional unemployment levels are more balanced, a number of relatively remote and geographically scattered pockets of under-performance remain. Though equity considerations remain relevant with respect to less well-off peripheral areas, all regions should contribute to maximising national economic growth.
    • Finland
      Regional disparities have not increased recently, but problems remain in the north and east, and there are major differences in development prospects between urban centres and more remote peripheral areas. The municipal level increasingly faces challenges. The changing demographic situation is a major concern. The Finnish population is ageing faster than anywhere else in Europe.
    • France
      The perception of regional problems has shifted over time from a rather uniform approach in the 1970s to a more differentiated view since the 1980s, which focuses on regional differences and unique regional potential. There is an increasing view that the Capital Region’s potential as a growth engine should be promoted, especially considering its place in the world.
    • Germany
      The core problem in Germany is ongoing structural socio-economic disparities between old and new Länder, despite some positive developments in recent years which have facilitated closing the gap in major urban areas in the east. The new Länder not only continue to lag behind the rest of the county on key indicators such as GDP per capita and unemployment, but have also experienced significant demographic decline in recent years, partially due to the out-migration of younger, educated people. Some areas in the old Länder also face specific structural problems, for example, due to long-term industrial or agricultural restructuring.
    • Greece
      Regional disparities measured in GDP per capita, unemployment, and the provisions of basic public services remain severe at both inter-regional and intra-regional levels. The convergence of regions to the EU average in GDP per capita terms is a slow and difficult process due to the diverse problems of different regions (e.g. demography, economic structure, and geographical features). Generally, except for the areas around Thessaloniki and Attiki (Athens), the country’s regions have neither sufficient critical mass in terms of population nor the necessary production and technological dynamics.
    • Hungary
      The "traditional" regional (spatial) problem in Hungary are regional disparities, especially between the east and west. Core-periphery and urban-rural dichotomies exist as well. Besides the capital city, which is the most developed part of the country, the northern, western and central parts of Transdanubia can be considered as the most developed territories of Hungary.
    • Iceland
      More than half of the Icelandic population (320 000 inhabitants) live in the Capital Region, and depopulation of the rural areas is persistent. This imbalance has received regular policy attention from successive Icelandic governments. With the growth of other industries and services, the importance of fishing and agricultural activities has diminished. The changes in the economic conditions for these activities (larger fishing vessels, general technological developments and automatisation, trading of quotas) mean that new employment opportunities need to be developed that are suitable for the younger well-educated generations in rural areas. A key challenge is delivering well-paying jobs and in some cases public services as well to the remote rural communities, dispersed over a large territory with difficult climatic conditions.
    • Ireland
      Convergence between the regions has taken place, but development disparities continue to persist, particularly between the more prosperous eastern and southern parts of the country, especially Dublin and the more peripheral regions (Border, Midlands and West: BMW Region). Rural-urban disparities are an ongoing concern, while employment and population growth have become more widely distributed.
    • Italy
      The focus of regional problems remains on the socio-economic disparities between a wealthy and developed centre-north and the lagging Mezzogiorno in the south. This entails a complex policy response to internal disparities and the overall stagnation of growth rates at the national level.
    • Japan
      Tokyo is at the top of the mono-axial spatial structure. This structure brought about the depopulation of the countryside, delays in improving the living environment in metropolitan areas, and fragility against disaster. In particular, small cities, villages and mountainous areas have decreased regional vitality and face the challenge of maintaining social service provision in the context of a decreasing and ageing population.
    • Korea
      Throughout the "development era" that began in the 1960s and ran well into the 1980s, Korea deployed an export-oriented and centrally organised heavy industrialisation policy, favouring the so-called Gyungbu development corridor (Seoul-Busan-Ulsan- Gyungnam province axis). The continuing influx of population and industries into the Gyungbu corridor has resulted in significant regional imbalances and caused several socio-economic concerns.
    • Luxembourg
      The regional problems have been traditionally associated with the restructuring of the coal and steel industries in the south and with fragile rural areas in the north. The key challenges are the lack of economic diversification (with a focus on the financial services sector as the motor for development), the strong degree of centralisation of economic activities in the centre of Luxemburg and accompanying congestion problems.
    • Mexico
      Regional disparities are large and are an important feature of the general social cohesion challenge. In particular, there is a significant difference in living standards. Another challenge is to create the conditions necessary to take advantage of the competitiveness of the regions and to integrate them into the international market. Such required conditions include: communications and transport, water infrastructure, training of human capital, and overcoming the deficits of social needs.
    • Netherlands
      The perception of regional disparity continues to be debated. The fundamental interdepartmental review (IBO) of regional policy in 2004 argued that the disparities between the northern provinces and the rest of the country are small and that more emphasis should be placed on stimulating economic development throughout the country. This has resulted in declining focus and attention on lagging regions and an increasing emphasis on the reduced growth performance of the Dutch economy and regional obstacles which limit national growth potential.
    • New Zealand
      Economic activity and growth are unequally distributed amongst New Zealand regions. However, the inequality between New Zealand regions is not substantial. A significant portion of inter-regional economic variation appears to be explained by labour market and demographic variation. Regions are best placed to take responsibility for their own economic development; however, they are not always able to achieve the necessary strategic, outward focus (without support from central government) because of the difficulties of bringing together a wide range of diverse actors.
    • Norway
      The traditional regional challenge has been the sparse population across much of the country, combined with peripheral areas that experience accessibility problems due to long distances to regional centres and markets.
    • Poland
      Before the current global crisis, the Polish economy experienced significant levels of overall growth. Poland’s average annual growth rate was greater than 4% between 1995 and 2005, and growth of GDP exceeded 6% in 2006 and 2007, ranking Poland second among OECD member countries. Poland has better resisted the impact of the global crisis than other eastern European countries. Growth slowed in the second half of 2008 but was still positive in early 2009.
    • Portugal
      In Portugal, the urban/rural divide commonly found in OECD member countries has translated in a gap between dynamic and densely populated urban areas (mainly along the coast) and declining low-density rural areas (concentrated in the interior of the country). Regional disparities are less visible in terms of GDP per capita than in terms of unemployment rates, educational attainment, and R&D investment. Accordingly, strong variations of competitiveness across regions are increasingly regarded as a challenge.
    • Slovak Republic
      The location of Bratislava, the capital of the Slovak Republic, in the extreme west of the country (just 50 kilometres from Vienna, the capital of Austria) contributes to polarised economic growth and the west-east divide of economic development in the country. There are some concerns regarding the urban-periphery of Bratislava. Southern and eastern parts of the country have a rural character, with below average economic productivity, low investment rates, high unemployment, spatial concentration of marginalised groups, and poor transport and infrastructure.
    • Slovenia
      Slovenia has significantly closed the gap with the OECD average level of GDP per capita without creating major imbalances. However, the development of a market economy has highlighted the disparities between Slovenia’s 12 statistical regions. The richest region Osrednjeslovenska (Central Slovenia, which encompasses the capital Ljubljana) scores the highest on most indicators. It concentrates about one-third of registered businesses and one-quarter of the working-age population. The poorest region (Pomurje in the north-east) is largely agricultural and has the highest unemployment rate in the country. Regions are relatively small and their economic performance often depends on a small number of companies.
    • Spain
      Regional problems are generally analysed in the context of EU Cohesion Policy and a comparison of regional indicators with EU figures. In terms of GDP per capita, the number of regions above the EU average has increased, while Convergence regions (except for Murcia) are approaching the EU average at a slower pace than Spain as a whole. Other issues include the concentration of population growth in coastal and urban areas, pronounced ageing in regions with lower population density, performance below the EU average in productivity and labour costs, labour market and training variables, and inadequate R&D and innovation, especially in Convergence regions.
    • Sweden
      Sweden has the second highest level of demographic and economic concentration in the OECD (Stockholm, Skåne and Västra Götaland encompassed 51% of the national population and 57% of the national output in 2005), but also the lowest levels of regional inequality in GDP per capita and in GDP per worker among OECD member countries. The three largest regions of Stockholm, Skåne and Västra Götaland accounted for 70% of national output growth over 1995-2005.
    • Switzerland
      Many regions, especially rural, mountainous, and border areas lack sufficient economic growth as well as competitive jobs and suffer brain-drain to urban centres. The rural economy, farming, forestry and tourism are in the midst of a comprehensive structural change and face challenges of globalisation.
    • Turkey
      The imbalances in socio-economic structure and income level both across rural and urban areas and across regions continue to be challenges. With the accession process to the EU, the mitigation of the development disparities between Turkey and EU member countrys is also gaining importance. In cities, the existing physical and social infrastructures and employment opportunities remain insufficient in meeting the pressure created by intense population migration movements. In rural areas, decreasing agricultural employment has raised the need to improve non-agricultural employment opportunities. The scattered and disorganised structure of rural settlement restricts the effective provision of physical and social infrastructures.
    • United Kingdom
      All regions have experienced considerable growth in recent years. Although trends indicate narrowing gaps between regions, for instance with respect to regional skills, the gap between the top (south-east) and bottom performing regions remains a core concern. Entrepreneurial activity and innovation especially continue to be focused on the south-east. London and cities in the south-east/eastern regions are the key drivers of the English economy with "islands of growth" in city regions like Bristol, Leeds and Manchester in particular, and some smaller cities. The key is how to spread this growth more widely, or at least, improve access to areas of growth from the areas which are growing more slowly.
    • United States
      The United States federal level does not have an over-arching regional policy; however, various programmes for economic development with a place-based approach tend to focus on areas of economic distress or reconversion. The definition of the spatial unit depends on the programme. In some cases the region is smaller than a city (a neighbourhood or community). However, there are examples of a regional approach with a much larger area. The most prominent example is the Appalachian Regional Commission, a federal-state partnership to support the economic development of the Appalachian region that encompasses parts of 13 contiguous states.
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  • ANNEX A. Profiles of EU Policy
    The following challenges necessitated regional policy at EU level: economic and social disparities across member countries and their regions; the need to increase solidarity and competitiveness and promote growth and employment; and responses to new challenges such as globalisation, climate change and ageing.
  • ANNEX B. Comparative Analysis of Cross-border Co-operation in OECD Member Countries
    Cross-border regions come to the fore under increasingly globalised markets. Their peripheral and remote location from the national centre has tended to leave these regions under-developed. Legal and institutional factors have erected barriers to the smooth flow of people and goods across borders in order to protect domestic (mainly security) interests. However, with increasing pressure for free trade and integrated markets, borders are now increasingly being redefined as bridges or communication channels, rather than barriers. This brings new economic opportunities for cross-border regions.
  • ANNEX C. Urban-rural Linkages: In View of Controlling Urban Sprawl
    The OECD has studied urban-rural linkages from a broad perspective (OECD, 2009a). In this report, the focus is on the spatial and fiscal inter-dependence of urban areas and their neighbouring rural regions, especially on how to control urban growth in the process of urban sprawl. In general, rapid urbanisation has required governments to deal with the short-term impacts of land development and the accompanying economic growth over long-term economic, environmental and social interests, but unplanned urban growth poses short- and long-term challenges to economic growth and sustainability.
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