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International comparisons of economies and societies tend to be undertaken at the country level; statistics refer to gross national product, for example, while health and education levels tend to be measured and debated in national terms. However, economic performance and social indicators can vary within countries as much as between countries.
OECD Regions at a Glance makes these variations visible, providing region-by region indicators – mainly in the form of graphs and maps – to identify areas that are outperforming or lagging behind. Patterns of growth and the persistence of inequalities are analyzed over time, highlighting the factors responsible for them.
OECD Regions at a Glance 2009 is organized around four major themes and a special focus on regional innovation.
Innovation is crucial for improving the competitiveness of individual regions and achieving long-term national growth. In OECD countries, jobs and spending on research and investment are strongly correlated and concentrated in a few regions within countries. For example, in the United States, one of the leading countries in R&D activities, R&D expenditure was almost 6% of Maryland’s GDP and less than 0.5% of Wyoming’s.
Innovation output – here measured by patent applications – is also very concentrated in a few regions. In 2005, 45% of all patent applications in OECD countries were recorded by just 10% of regions. Even though, patents tend to be the outcome of the applied research carried out mainly in the private sector, evidence suggests a growing collaboration with public institutions and spillovers from theoretical research. Geographical proximity still plays a role in creating synergies among innovators as most of co-patenting activities are carried out within national borders.
If today few regions carry-out most of the research intensive activities, others can grow their innovation potential developing their capacity to adopt and use knowledge produced elsewhere. The process of specialisation towards knowledge-oriented sectors is in fact taking place in many OECD regions. In two-thirds of OECD countries the fastest specialising regions have transformed their production structures in recent years, from traditional manufacturing into more technology-intensive manufacturing.
The skill level of the labour force determines a region’s ability to promote and use innovation, and its future competitiveness will be determined in part by the number of students currently in higher education. There are large regional differences in higher education attainment rates in most OECD countries; the gap is the widest in the Czech Republic, the United States and Portugal. In 20 out of 23 OECD countries, there is a positive correlation between a skilled labour force and the presence of universities and students, showing that some regions are better equipped than others in terms of current and future stock of human capital, and in dealing with technological change.
Local factors matter in attaining national substainable growth. In fact, in recent years, ten per cent of OECD regions have been responsible for more than 40% of GDP growth and job creation.
Part II presents a number of broad macroeconomic indicators of regional development, including the concentration of population and elderly population, output and employment by industry. In OECD member countries, population is generally unevenly distributed among regions: Just 10% of regions account for about 40% of the total population in 2005 and this density has been increasing in recent years. In 2005, almost half of OECD population lived in urban regions, which accounted for only 6% of OECD area.
In Japan, Italy and Germany the elderly population (those aged 65 years and over) is almost one-fifth of the total population. The fact that younger people tend to migrate from rural to urban areas to a greater extent than older people has also contributed to an increased concentration of the elderly population in rural and intermediate regions. In 25 OECD countries, the elderly dependency rate (the ratio of the elderly population to the working age population) was higher in rural areas than in urban ones, with implications for the capacity of rural regions in generating sufficient resources to provide for the needs of elderly people.
Variations among regions in OECD countries can be very substantial and persistent; in recent years, regional differences in economic output, labour productivity, job creation and labour force participation within countries have been at least the double of those among OECD countries.
Part III quantifies regional disparities in economic performance and identifies local assets that can be mobilised to improve a region’s competitiveness. Besides human capital and innovation capacity, already showed in Part I, the regional indicators analyzed here include labour productivity, the degree of industry specialization, employment and labour force participation.
For a large part, economic output differences are attributed to disparities in productivity and in the utilization of the available labour force. Regional differences in labour productivity (GDP per worker), within countries were notably high in Turkey, Mexico and Poland, where labour productivity in the top regions was more than four times higher than in the bottom regions. Labour productivity in rural regions is generally lower than in urban regions, even though rural regions have been catching-up in the past ten years.
In some regions, unemployment remained persistently high in the decade leading up to 2006, when national employment rates had generally been falling. In 2006 regional differences in unemployment rates within OECD countries were almost twice as high as those between countries. In Canada, Germany, the Slovak Republic and Spain, unemployment rates ranged from as low as 5% in some regions to above 20% in others.
High regional disparities are not only found in unemployment rates and long-term unemployment rates, but also in the participation of women and young people in the labour market.
Both national and regional factors determine the way a region grows. Some regions may do well because of national factors - such as the national regulatory environment or the overall business cycle - or because they mobilise their resources to promote growth. Or for a mix of both. If all the regions in a country grow faster than the OECD average, then one possible explanation is that national factors may be predominant; however, if an individual region grows faster than other regions in the same country and than OECD regions in general, then it could be that regional factors are driving growth.
Among the 20 fastest-growing regions in the OECD area is the Irish regions which benefited from strong national growth in the first half of the decade; similarly, some Korean regions were also pushed along by national growth. By contrast, regional factors were the main driver in the Mexican region of Quintana Roo and the Greek region of Attiki.
The performance of OECD regions in 1999-2005 suggests that region-specific factors may play a significant role both in the growth and the decline of a region’s economy. Among the regional factors, increases in labour productivity were a key component of regional growth among top performing OECD regions. Among the 20 slowest-slowest growing regions, declines in employment rates and lower participation rates had the largest impact.
Economic indicators – such as GDP per capita and employment – do not fully describe a region’s quality of life. Security, health, education and the quality of environment all contribute to a region’s “well-being”. Part V shows that disparities among OECD regions regarding access to such services are substantial and affect not only people’s quality of life but also a region’s capacity to attract jobs and increase competitiveness.
Regional variations in the health status, as measured by the age-adjusted mortality rate, are substantial and larger than across OECD countries, especially in Mexico, the United States and Portugal. Location also matters for access to health services, and rural regions are often disadvantaged compared to urban ones.
The access to education is varied among regions within the same country. If today the demand for skills is increasing, and a high school diploma is the minimum level to participate in the job market, still a quarter of the OECD labour force has received only basic education and in some regions in Mexico, Spain, Portugal and Italy, this proportion is as high as half of the labour force.
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