OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

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Reducing regional disparities in productivity in the United Kingdom

The United Kingdom displays large regional disparities in productivity compared to most other OECD countries, with a large gap between London and most other regions. This holds back aggregate productivity and growth, and contributes to regional differences in living standards. To make the lagging regions more attractive to companies and workers, transport links between and within cities should be improved by increasing infrastructure investment outside London. Another policy priority is to improve the local business environment through more spending on innovation and increased support for investment and skills. Also, local authorities should have more freedom in setting education and training goals and the land-use planning system has to be more responsive to meet housing needs in cities. The role of subnational government is sub-par relative to the OECD average, but more devolution has recently been introduced in several city-regions. Such efforts towards more decentralization need to continue to cover larger parts of the country and involve greater transfers of powers and responsibilities at the local level.


Keywords: decentralisation, transport, Productivity, regional development
JEL: R4: Urban, Rural, Regional, Real Estate, and Transportation Economics / Transportation Economics; R3: Urban, Rural, Regional, Real Estate, and Transportation Economics / Real Estate Markets, Spatial Production Analysis, and Firm Location; O4: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity; R5: Urban, Rural, Regional, Real Estate, and Transportation Economics / Regional Government Analysis
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