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19/03/2019 - Governments should take specific actions now to ward off deepening divides across regions and seize new opportunities in the face of global “megatrends”, the OECD said this week. Two new OECD reports highlight that regions are not equally equipped to handle future technological changes, ageing, climate change and other megatrends; and that decentralisation policies need to work more effectively. 

The analysis delivered to the Fourth Ministerial Meeting of the OECD Regional Development Policy Committee taking place in Athens, Greece, identifies the following priorities for better regional outcomes and the well-being of their residents:

• Promote regional development policies that go beyond traditional compensatory subsidies to build on local assets and knowledge and invest in the context of regional strategies.
• Assess how national policies in many other areas such as education, innovation, housing, and transport will affect different types of regions, from cities to rural areas.
• Improve the way decentralisation works. A large number of national reforms have promoted decentralisation in recent decades, but their success depends greatly on the way decentralisation is designed and implemented. To address the challenges, the OECD offers 10 guidelines for policymakers, including clear assignment of responsibilities, avoiding unfunded mandates, and improving the capacity of regional and local governments.
  
  

Key data points on regional differences for policymakers to consider include:

• Workers’ risk of seeing their jobs automated varies between 4% and 39% across OECD regions. This is set to deepen divides between regions but also across skill levels of workers in the same region—particularly cities.
• The region with the highest unemployment rate in a country usually doubles or triples the unemployment rate of the region with the lowest. Megatrends could further exacerbate these disparities.
• Almost one in four cities has lost population since 2000, and many regions are projected to lose population in the coming decades which, compounded with ageing, will put a major strain on local public finances.
• Productivity divides in many countries are not improving; however, productivity is a key determinant of salaries and thus many aspects of well-being. The least productive region of a given country is on average 46% less productive than the most productive one – usually home to the country’s largest city. Megatrends such as technological change and ageing have been favouring large metropolitan areas and in one third of OECD countries such regions account for most of national productivity growth.
• In the 36 OECD countries, there are almost 137 000 elected subnational governments that account for 16% of GDP, 40% of public expenditure, 57% of public investment and 64% of environment and climate-related public investment.
  
  

The OECD urged Ministers to join forces with regional and local governments to examine how their policies might help or hurt the futures of people who live there.

“Governments have time to get ahead of coming megatrends that will affect in different ways and with different intensity every region in their countries” said OECD Secretary-General Angel Gurría. “Policy choices need to account for this diversity and the specific reality of each region, opening up new opportunities for people living in struggling places and preventing disadvantages from deepening.”

The Ministerial event, chaired by Greek Deputy Prime Minister and Minister of Economy and Development Yannis Dragasakis, is bringing together more than 40 countries and international organisations. Additional resources for countries, as well as outcomes of the Ministerial meeting include:

• OECD Principles on Urban Policy and OECD Principles on Rural Policy: The two sets of Principles provide guidance for national governments to design and implement better urban and rural development policies alongside subnational governments and other stakeholders. 

• Declaration on Policies for Building Better Futures for Regions, Cities and Rural Areas: Countries are working at the meeting to make a collective commitment to consider the place-based dimensions of megatrends, and put in place policies that will help all regions, cities and rural areas build better futures in the face of these changes from technological change to environmental considerations. Final outcomes of the discussion will be available on the Ministerial website.
  
  

Meeting on the margins of the Ministerial, the OECD Champion Mayors for Inclusive Growth and the OECD Roundtable of Mayors and Ministers also launched the Athens Roadmap: Innovation for Inclusive Growth in Cities. In it, Mayors commit to leveraging the full potential of social, technological and public sector innovation to promote policies and practices whereby cities can become places where prosperity is shared, opportunity accessed, and well-being expanded to all segments of the society. The Champion Mayors for Inclusive Growth brings together local leaders committed to tackling inequalities and promoting a more inclusive economy in their cities, and is part of the broader OECD Inclusive Growth initiative.

For further information, journalists are invited to contact the OECD Media Office (+33 1 45 24 97 00).

Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.