OECD Regions and Cities at a Glance 2026

Executive summary

OECD regions are not equally prepared for the opportunities and challenges presented by economic, social, technological, demographic and environmental changes. Even neighbouring regions can face significantly different exposures. One constant, not least given its role in responding to many of these changes, is the importance of productivity growth. But its potential to play this role varies considerably by place, reflecting agglomeration effects, access to labour, skills, finance and markets, and exposure to the changes themselves.

Demographic change, for example, directly affects labour markets and productivity, while productivity growth can be a critical response to labour shortages in regions facing population decline and ageing. In growing regions, it often goes hand in hand with concentrations of knowledge, innovation and investment, but growth can also intensify housing pressures that, in turn, weigh on productivity. Moreover, the same forces that attract people to growing regions may exacerbate productivity challenges in shrinking ones, risking self-reinforcing cycles of decline even as some aspects of their attractiveness, such as housing affordability, improve.

Similar spatial differences arise from changes related to climate and technology, as well as shifts in industry and trade. There is therefore no one-size-fits-all solution that can be applied across regions or groups of regions, even where they share characteristics such as their degree of urbanisation. The evidence presented in this publication, highlighting differences in both exposure to shocks and structural changes and responses to them, reinforces the need for place-based data and policy responses.

Demographic change is making productivity growth more important, especially in shrinking regions, but its drivers are increasingly concentrated in growing regions

Regional catching up depends on both productivity and employment growth. Between 2018 and 2024, among the 13 OECD member and accession countries where GDP per capita gaps narrowed, relatively higher productivity growth in lagging regions was the main driver in 6, while relatively higher employment growth was the main driver in 7. Lower employment rates mean that employment growth still offers scope for lagging regions to narrow income gaps. But that scope is shrinking as employment rates face a natural ceiling and lagging regions typically experience the largest declines in working-age populations. Productivity growth will therefore become increasingly important for reducing regional income inequalities.

Yet the assets that support productivity growth are highly concentrated, typically in higher-income, higher-employment regions. Knowledge-intensive business services cluster in large urban agglomerations, benefiting from specialised skills, proximity to clients and knowledge spillovers. In 2024, knowledge-intensive business services made a greater contribution to labour productivity growth than any other sector in 17 of the 34 OECD Member and accession countries with available data. In the United States, these services in California alone contributed more to national productivity growth than manufacturing nationwide.

AI, innovation and investment show a similar geography. In 2025, regions with the highest shares of tertiary-educated workers – mostly metropolitan or capital regions – 52% of employment is highly exposed to generative AI, compared with 42% elsewhere. Between 2019 and 2024, the largest functional urban area accounted for the largest share of patents in 27 of 31 countries, while a single small region attracted more than half of national venture capital funding in 32 of 39 OECD Member and accession countries with data in 2020-2024. The challenge is to widen access to knowledge and new technologies while building on the distinct strengths of different regions.

People continue to move towards opportunity, increasing pressure on housing markets

Population is becoming increasingly concentrated in many of the same metropolitan regions that are hubs for knowledge and innovation. Across OECD member and accession countries with available data, metropolitan regions increased their share of national population in 35 of 37 countries between 2005 and 2024 and are projected to grow fastest – or decline least – in 27 of 33 countries by 2045. International migration reinforces this concentration, with flows to metropolitan regions exceeding those to non-metropolitan regions in 22 out of 23 countries with available data.

Housing pressures can make it harder for workers and firms to access the opportunities these places offer, limiting workers’ access to productive jobs, constraining firms’ expansion in high-productivity locations and weakening the allocation of labour and investment across regions. These pressures are substantial: housing is 27% more expensive in urban centres than the national average across 23 OECD countries. Within 13 OECD countries with available data, buying a dwelling in a country’s largest metropolitan region requires, on average, an additional 6.9 years of income compared with the most affordable one. Yet housing supply in large functional urban areas has expanded least relative to population.

Lower housing costs can make shrinking regions more affordable, but affordability alone is not enough to attract and retain people: jobs, services, amenities and opportunities for social interaction also matter. Among people under 35 in 46 OECD member and accession countries, 22% of rural residents are dissatisfied with opportunities to socialise, compared with 15% in cities, with gaps reaching over 20 percentage points in Sweden and Greece.

Demographic change compounds differences in regions’ capacity to adapt to climate hazards

Climate risks vary considerably with local exposure, vulnerability and adaptive capacity. In nearly one in five OECD large regions, average temperatures in 2021-2025 were more than 1.5°C higher than during the 1981-2010 reference period. Between the same periods, the number of OECD large regions combining a high share of older residents with more than one month of strong heat stress per year rose more than fourfold, from 16 to 74. Without effective adaptation, these hazards can widen regional disparities by damaging infrastructure, reducing productivity and weakening growth.

Regions also face the climate transition from very different economic and industrial starting points. GHG emissions have fallen below 2020 lockdown levels across all settlement types, while non-fossil electricity generation has increased in most regions with available data. Yet electricity still accounts for less than 27% of final energy consumption in 85% of OECD regions with available data and less than 30% of industrial energy use in two-thirds of regions. Decarbonising buildings will also require heating electrification and large-scale renovation, particularly in rural areas where dwellings tend to be older and larger.

These challenges can compound existing disparities where regions facing lower productivity, employment, population decline and ageing are also highly exposed to climate hazards, while their governments have less capacity to invest in the infrastructure needed to adapt to them.