This chapter begins with an assessment of the growth problem confronting OECD economies and the relevance of regional policy to the challenge of achieving strong, sustainable and equitable growth. It then turns to an analysis of the relationship between regional and aggregate growth performance, before analysing in depth two of the long-term forces shaping regional development: ageing and migration.

This chapter offers a preliminary analysis of the impact of the crisis on regional labour markets, using recent regional employment data. The discussion then examines the kind of policies needed to foster the creation of sustainable employment during the recovery phase and the extent to which regional or local action may be critical to the effectiveness of such policies.

This chapter discusses the impact of the crisis on the finances of sub-national governments, a crucial but often under-appreciated aspect of the current fiscal environment. These are major challenges to be addressed by both national and regional policies. At issue are both fiscal sustainability, which may be jeopardised if sub-national financial strains are not addressed, and the strength of the current recovery, which will depend in part on the extent to which increasingly limited public investment resources are managed efficiently and in ways that promote growth.