Executive summary

Regional development policies cannot ignore international relations and the changing shape of globalisation. From the COVID-19 pandemic to growing geo-political instability, and the effects of climate change, digitalisation and demographic change, cumulative shocks and existing megatrends are producing asymmetric impacts, but also opportunities, within and between countries and regions. Firms themselves are beginning to respond to these changes, including in response to societal pressures for more sustainable, responsible, and green supply chains, but also in response to a greater awareness of supply-chain disruptions, with increased emphasis on ‘just-in-case’ rather than ‘just-in-time’ modes of production. At the same time there is an increasing political focus on key strategic and essential industries. Whilst it is difficult to anticipate how these changes will impact on countries and regions it is clear that they could be significant, and, indeed, present new development opportunities for lagging and falling-behind behind regions. Regional attractiveness policies that contribute to inclusive and sustainable regional development and to reducing asymmetries between regions, have an important role to play in seizing these opportunities (EC, 2022[1]; Diemer et al., 2022[2]), and, in turn, helping to address challenges from rising inequalities between regions, which have increased in half of OECD countries over the last two decades (OECD, 2023[3]).

The degree to which regions can withstand and recover from shocks and crises is influenced by their international connections. For example, the unique combination of assets they possess – from digital and transport infrastructure to human capital – play an important role in determining how actively they participate in the global economy. Airports and ports, roads, rail, and fibre optic Internet are all assets that regions can leverage to attract foreign direct investment (FDI), support businesses to export and cater to talent and visitors on the move. However, the assets that enable regional participation are growing increasingly diverse and opportunities for enhanced integration of left-behind regions in GVCs have increased in recent years. Not least through the rise in renewable energy investments, which can benefit remote regions, and the use of active industrial policies to localise key segments of supply chains.

There is not one sole objective of regional attractiveness. Whilst the primary focus is often on attracting investors, other dimensions, such as the visitor economy, can often be more significant, as the impact of the pandemic on tourism destinations demonstrated. In addition, and as a priority for all the regions taking part in this project, the attractiveness of a territory to talent is an important consideration of regions’ ability to develop.

Similarly, it follows that the assessment of attractiveness cannot be based on a single indicator, such as regional FDI, not least as, increasingly, there is a need to factor in impacts on inclusive and sustainable development. This is the basis for the OECD’s multidimensional approach to assessing regional attractiveness, which considers global engagement beyond international connections and financial drivers alone. In total, the methodology considers more than 50 indicators to develop regional attractiveness profiles, covering 14 dimensions of attractiveness, across 6 domains (economic attraction, connectedness, visitor appeal, natural environment, resident wellbeing, land use and housing). Because different regions have different challenges, opportunities and comparative advantages, the aim of this work is not to rank regions but rather provide an analysis of how they perform against each dimension.

To transform this dashboard into a policy tool, regional attractiveness compasses are developed to help regional policymakers and their partners identify potential areas to strengthen regional attractiveness and the possible trade-offs between these priorities and environmental objectives (climate and biodiversity) and/or inclusion (e.g. well-being and social cohesion). These compasses can be used to monitor, adapt and evaluate selected policies for regional attractiveness.

A regression analysis of the drivers of regional attractiveness (Chapter 3) highlights the following major levers:

  • On the investment front, the results draw a distinction between what drives the total capital expenditure of FDI and the total number of FDI projects. In terms of total expenditure, regions with comparatively strong digital performance and those with top universities located in the region appear to be hubs of FDI. When looking at the number of FDI projects, these findings remain significant, while rail and air transport are also found to be important drivers. To put this in perspective, the report finds that a 10 percentage point (10pp) increase in the population reachable by rail (within 90 minutes) would have led to 171 additional foreign investment projects.

  • From a talent attraction perspective, the analysis underscores the importance of affordable housing, fast internet speeds and the share of foreign students. For example, on average, and all things being equal, a 10pp increase in the share of the population satisfied with housing affordability translates into a 1.8pp increase in the share of foreign-born employed people in the working-age population (15-64 year-olds). This points to an important potential advantage for those non-metropolitan regions able to overcome the urban-rural digital divide. Moreover, the presence of international students makes a region more attractive to other foreign students, and talent, in a self-reinforcing way, increasing the potential for knowledge-sharing and co-creation.

  • Finally, attracting visitors is shown to be influenced by a cleaner environment as measured by air pollution levels and a pristine natural environment. An entrepreneurial economy is another important driver, with both business and leisure visitors likely attracted to the vibrant atmosphere and society often linked to these creative environments. Evidence also indicates that regions that host a higher share of international students are more attractive to international visitors.

Together with these quantitative results, the report provides an analysis of regional attractiveness policies and their governance mechanisms. Attractiveness does not occur by accident. Governance mechanisms in particular are complex processes and require effective coordination across multiple levels of government and multiple stakeholders to allow for efficient sharing of information (across administrative and geographical boundaries) and to leverage on potential economies of scale and scope, when designing and implementing regional attractiveness strategies. Development strategies also need to be adapted to the specific conditions and bottlenecks of different regional ecosystems. Roadmaps are therefore proposed for the implementation of policies to attract international investors (Chapter 4), talent (Chapter 5), and visitors (Chapter 6), and, also, to improve multi-level governance and coordination mechanisms (Chapter 7). Across all attractiveness targets, it is imperative that regions can build on shared objectives among different levels of government and different types of actors to support the general interest of the region and the country, and to avoid zero-sum competition between regions in terms of attractiveness.

These results are based on the experience gathered through 15 European pilot regions of the project – Eastern and Midland, Northern and Western, Southern (Ireland), Campania, Liguria, Marche, Sicily (Italy), Algarve, Centro, Lisbon Metropolitan Area (Portugal), Balearic Islands, Cantabria, Valencian Community (Spain), Dalarna, Norrbotten (Sweden) – whose regional case studies are available online (https://www.oecd.org/regional/globalisation.htm) along with webinars on key topics affecting regional attractiveness (attracting talent, ports/logistics, sustainable tourism development, Special Economic Zones).

Moving beyond this report, the work to understand the territorial dimensions – including disparities – of attractiveness can be further developed in support of inclusive and sustainable regional development policies, in particular for regions in a development trap. Given that there exist intra-regional differences, adopting a finer granularity for the analysis of territorial attractiveness at the Territorial Level 3 (TL3) and conducting targeted work at this scale can provide additional insights for regional policymakers. This approach has been experimented in this project with the Swedish regions of Dalarna and Norrbotten.

OECD countries and supranational authorities are quickly adopting new orientations to strengthen their place in the world economy, for example through targeted industrial policies that aim to secure key segments of (sustainable) value chains and those that concern food security and public health. A new framework will be required to support these shifts in production which have important subnational characteristics. This needs to happen without falling into protectionism, relying instead on attractiveness policies geared towards the segments of value chains considered strategic and based on existing local assets.

Moreover, the work points to rich scope to provide additional analyses, commentary, and advice around families of regions that display similar strengths and challenges dictated, in part, by their spatial characteristics. These include border regions able to benefit from inter-regional co-operation while also needing to hedge against strong cross-border competition; coastal regions which are often well-connected in relation to ports while benefitting from the visitor economy, yet with increasing challenges brought on by a changing climate; island regions which enjoy the same advantages as coastal ones yet, often, with greater challenges related to their insularity and infrastructure gaps; and mountain regions which are often remote, with lower access to services and threatened by the impacts of climate change. Boosting the attractiveness of these diverse sets of regions demands the adoption of strategies that are sensitive to the similar challenges that they face (Iammarino, Rodriguez-Pose and Storper, 2019[4]). Moreover, an attractiveness approach can help to identify urban-rural synergies that leverage the unique assets of each to attract targets and achieve more balanced development.

This work can be instrumental in contributing to the implementation of programmes aimed at mitigating (and not only adapting to) demographic change by boosting talent attractiveness at the subnational level and supporting policies targeted at certain categories (top talent, civil servants, students, families, etc.).

It can serve as a tool to develop territorial marketing strategies by including not only the creation of a brand shared by various stakeholders but also indirect visibility strategies (e.g. film production in regions).

Finally, this report can serve as the basis for additional support to regions and their partners in implementing the policy considerations identified to improve their attractiveness in pursuit of more resilient, inclusive and balanced regional development in a volatile global context.


[2] Diemer, A. et al. (2022), “The Regional Development Trap in Europe”, Economic Geography, Vol. 98/5, pp. 487-509, https://doi.org/10.1080/00130095.2022.2080655.

[1] EC (2022), Cohesion in Europe Towards 2050: Eighth Report on Economic, Social and Territorial Cohesion, European Commission.

[4] Iammarino, S., A. Rodriguez-Pose and M. Storper (2019), “Regional inequality in Europe: Evidence, theory and policy implications”, Journal of Economic Geography, Vol. 19/2, pp. 273-298, https://doi.org/10.1093/jeg/lby021.

[3] OECD (2023), Regional Outlook 2023: Addressing Regional Inequalities and Preparing OECD Regions for the Future, OECD, Paris.

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