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How Regions Grow

Trends and Analysis

image of How Regions Grow

Regional differences within OECD countries are often greater than those between countries and much inequality remains. This report explores what generates growth at the regional level. Based on in-depth econometric modelling and analyses, this report reframes the debate on regional policy and development, emphasising that opportunities for growth exist in all regions.

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Annex A

The Components of Regional Growth

Due to availability of data, average productivity at the regional level is defined by GDP per worker, where employment is measured at place of work. A rise in the regional share of GDP may be due to rapid growth – relative to the country’s growth rate – in average productivity. Average productivity, in turn, depends on technology, labour skills, production capital and infrastructure. All of these factors can be mobilised through regional infrastructure investment policies, through education and training to promote higher skill levels; and through research and innovation to create more efficient production technology. Therefore, the proportion of regional growth that is due to growth in average productivity tends to be based on regional assets.

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