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Building Competitive Regions: Strategies and Governance

image of Building Competitive Regions: Strategies and Governance

In recent years, the main focus of territorial policy has been on sustaining growth, not only to address relative decline, but also to make regions more competitive. Putting this in practice is complicated because different regions have different characteristics (urban, intermediate, industrial, rural, etc.), which imply specific policy and investment needs. This report assesses the strategies pursued by OECD member governments to address the competitiveness of regional economies and the accompanying governance mechanisms on which the implementation of these strategies rests. The report is principally based on findings from the series of reviews undertaken by the OECD Territorial Development Policy Committee at national and regional levels.

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Strategies

The changing nature of regional policy in OECD countries The significance accorded to competitiveness by policymakers reflects the increasing emphasis on competitive advantage for national economies. Policy makers across the OECD stress that their countries must become more “competitive” if they are to maintain their economic position vis-à-vis other industrial or developing nations and regions and respond to challenges such as perceived productivity gaps, competition for mobile investment, rapid adoption of new technology and electronic commerce. While the wording and emphasis vary, the definitions originating from governmental and nongovernmental sources tend to share some fundamental elements and assumptions. First, improving competitiveness at micro or firm level is a means by which to improve macro-economic performance. Second, benefits from improved firm competitiveness can be translated into better living standards for all. Spillover effects transfer benefits from growth in one area to another with which it is geographically linked or with which it has close economic ties. Third, competition takes place in, and is “tested” by, open (international) market conditions – it can be thought of as “relative productivity in traded sectors”. And, finally, places compete with each other, in the same way that firms do, for “market share”...

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