ASSESSING OECD’S REGIONS CONTRIBUTIONS TO
NATIONAL COMPETITIVENESS AND WELL-BEING AND WELL-BEING
SCORUS CONFERENCE, LISBON, 29 JUNE 2016
Joaquim Oliveira MartinsRegional Development Policy Division, OECD
How can regional policy re-ignite catching-up among lesser developed OECD
regions?
• Where has catching up been taking place, and
The core question
• Where has catching up been taking place, and where has it not?
• What have policies been doing to promote catching up?
Recent aggregate trends of Labour productivity growth, 2001-2014
2
2.5
3
%
Japan United States Euro area (19 countries)
Financial crisis
Source: OECD Productivity database; moving averages (t, t-1, t-2)
-1
-0.5
0
0.5
1
1.5
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
In 2007, several US sectors were displaying poor productivity
performance, eg. Construction -12%
The “great divergence” across regions, metropolitan areas and people
GDP per capita dispersion across
regions withincountries is now
greater than acrosscountries
GDP per capita dispersion across
metropolitan areas within countries isgreater than across
countries
Productivity growth of frontier regions outpaces that of most regions
Averages of top 10%
(frontier), bottom
90 000
100 000
USD PPP per employee
Frontier regions Lagging regions 75% of regions
1.6% per year
Notes: Average of top 10% and bottom 10% TL2 regions, selected for each year. Top and bottom regions are the aggregation of regions with the highest and lowest GDP per worker and representing 10% of national employment. 19 countries with data included.
bottom 75%, and bottom
10% (lagging) regional GDP per worker,
TL2 regions
50 000
60 000
70 000
80 000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
1.3% per year
1.3% per year
Where are the frontier and the catching-up regions? TL2s, 2000-2013
60
70
80%
Frontier (41) Catching-up (65) Keeping pace (107) Diverging (76)
70% of mostly urban frontier regions contain very large cities
75% of diverging mostly urban
0
10
20
30
40
50
Mostly Urban (127) Intermediate (62) Mostly Rural (100)
75% of diverging mostly urban regions contain very large cities
Decomposition of labour productivity growth on
frontier shift and catching-up effect for the
top-50 productivity regions
High labour
Regions ranked by GDP per worker growth rate, 2000-2013
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Kuyavian-Pomerania (POL)
Greater Poland (POL)
North Dakota (USA)
Lesser Poland (POL)
Bratislava Region (SVK)
Newfoundland and Labrador (CAN)
Western Australia (AUS)
East Slovakia (SVK)
West Pomerania (POL)
Lower Silesia (POL)
Saskatchewan (CAN)
Chungcheong Region (KOR)
Central Slovakia (SVK)
Lublin Province (POL)
Groningen (NLD)
Lubusz (POL)
Wyoming (USA)
West Slovakia (SVK)
Podlasie (POL)
Opole region (POL)
Podkarpacia (POL)
Jeju (KOR)
Lodzkie (POL)
Rank
Catch-up Frontier Shift
High labour productivity
growth can happen in different types of regions and often
results both from a dynamic frontier and catching-up
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
-2 0 2 4 6
Lodzkie (POL)
Gangwon Region (KOR)
Southeast (CZE)
Jeolla Region (KOR)
Gyeongnam Region (KOR)
Gyeongbuk Region (KOR)
Moravia-Silesia (CZE)
Alaska (USA)
Mazovia (POL)
Nebraska (USA)
Silesia (POL)
Australian Capital Territory (AUS)
Madeira (PRT)
Central Hungary (HUN)
Central Moravia (CZE)
Warmian-Masuria (POL)
Capital Region (KOR)
Northern Great Plain (HUN)
Montana (USA)
Pomerania (POL)
South Dakota (USA)
Prague (CZE)
Oklahoma (USA)
Eastern Slovenia (SVN)
Northeast (CZE)
Southwest (CZE)
Louisiana (USA)
Iowa (USA)
%
WHAT IS DRIVING CATCHING-UP? WHAT IS DRIVING CATCHING-UP?
The tradable sector appears to make the difference: due to “unconditional” convergence?
All tradable sectors, TL2 regions
40
45
50
2013 2000
%
Notes: Tradable sectors are defined by a selection of the 10 industries defined in the SNA 2008. They include: agriculture (A), industry (BCDE), information and communication (J), financial and insurance activities (K), and other services (R to U). Non tradable sectors are composed of construction, distributive trade, repairs, transport, accommodation, food services activities (GHI), real estate activities (L), business services (MN), and public administration (OPQ).
20
25
30
35
40
Frontier Catching-up Diverging Frontier Catching-up Diverging
Tradable GVA share Tradable employment share
Different segments of the tradable sectors, TL3 regions, 2013
Manufacturing Tradable services Resource extraction & utilities
Notes: Tradable sectors are defined by a selection of the 10 industries defined in the SNA 2008. They include: agriculture (A), industry (BCDE), information and communication (J), financial and insurance activities (K), and other services (R to U). Non tradable sectors are composed of construction, distributive trade, repairs, transport, accommodation, food services activities (GHI), real estate activities (L), business services (MN), and public administration (OPQ).
Other usual factors seem much less discriminant for regional catching-up
Educational attainment in the labour force
R&D expenses as a share of GDP by sector
Perhaps the complementarity between these factors and the exposure to tradable sectors is also important
How regional catching-up compounds into national labour productivity growth?
Annual average growth in real per worker GDP between 2000-2013 (or closest year available).
� Regional catching-up plays an
important role for national growth
Region’s contributions to national growth vs. labour productivity growth: Austria
Percentage contribution to national GDP growth, 2000-13 Contribution to labour productivity growth, 2000-13
Notes: Percentage contribution shows the share of total GDP growth that was due to growth in the indicated region. Total contribution sums to 100%.
Notes: The contribution of a region is defined as the difference between the national annual average labour productivity growth rate and the same rate excluding the indicated region.
Region’s contributions to national growth vs. labour productivity growth: Portugal
Contribution to labour productivity growth, 2000-13 Percentage contribution to national GDP growth, 2000-13
Notes: The contribution of a region is defined as the difference between the national annual average labour productivity growth rate and the same rate excluding the indicated region.
Notes: Percentage contribution shows the share of total GDP growth that was due to growth in the indicated region. Total contribution sums to 100%.
Regional disparities in multi-dimensional living standards higher than for income alone
But catching-up does not seem to be incompatible with improvement in well-being dimensions
Unemployment rate Air pollutionLife expectancy
MAIN POLICY LINES TO PROMOTE REGIONAL CATCHING-UP & WELL-
BEINGBEING
• Economy-wide structural reforms help regional catching-up, more so if complemented by regional development policies
– Product Market Restrictions (PMR): state control
Policy responses I
– Product Market Restrictions (PMR): barriers to entrepreneurship
– Product Market Restrictions (PMR): barriers to trade & investment
– Employment Protection Legislation (EPL): regular contracts
– Employment Protection Legislation (EPL): temporary contracts
– Active Labour Market Policies (ALMP): public expenditure in ALMP, in % GDP
– Complementarity among these macro-structural policies
• Other macro factors (openness, inflation, budget deficit, debt)
• Well-designed and well-implemented public investments may support regional catching-up: use of OECD Public Investment Toolkit
Policy responses II
Figure 1. Trends of weakened public and private investment may undermine productivity goals
% change private investment (GFCF) % change public investment (GFCF)
Notes: OECD total excludes the following countries due to lack of data over the period: Chile, Mexico and Turkey.
Source: Calculations based on OECD National Accounts.
-15%
-10%
-5%
0%
5%
10%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
• Multi-level governance and territorial reforms can unlock productivity potential and support inclusion
– Regional development policy most focused on
Policy responses III
– Regional development policy most focused on growth and productivity
– Address urban policy split between transport, spatial planning, housing and social inclusion
– Rural policies often remain sectoral (e.g. agriculture), but efforts to broaden the scope
Governance of regional/urban/rural policy
Reported lead ministries or entities across three policy fields
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