Opening Remarks by Angel Gurría
Athens, Greece - 19 March 2019
(As prepared for delivery)
Ministers, Ambassadors, Heads of Delegation and Government Officials, Ladies and Gentleman,
It is an honour to open the 2019 OECD Regional Development Ministerial Meeting on “Megatrends: Building better futures for regions, cities and rural areas”. I would like to thank the Greek government – especially the Deputy Prime Minister and Minister of Economy and Development, Yannis Dragasakis – for his leadership in the Ministerial and for generously hosting us in Athens.
I would also like to thank our Vice-Chairs, Korea and Chile for their support, and pay a warm welcome to the participating countries, international organisations, and other stakeholders joining us today.
We have already had some very interesting discussions yesterday and this morning in the context of the 4th Meeting of Champion Mayors for Inclusive Growth and the 7th Roundtable of Mayors and Ministers. Many of the insights and ideas discussed during those meetings will undoubtedly provide food for thought in this Ministerial.
For many years, mainstream economics touted mobility as the silver bullet for addressing regional inequalities. Can’t find a job? Move to a place where you can. Housing too expensive? People will move to a more affordable community and prices will eventually settle.
Today however, the policies borne out of this approach are falling short. Regional economic divides remain persistently high: on average, the most productive region in a country is twice as productive as the least productive region. In the OECD, lagging regions are truly catching up with the top regions in only about one-third of countries. While economists have acknowledged that trade shocks would result in some localised job losses, the impacts are proving to be much starker and more enduring than predicted.
Today, the top 20% of regions are more than twice as rich as the poorest 20% in over half of OECD countries. And in most OECD countries, capital regions (often home to a country’s largest city) were responsible for at least 25% of net job creation between 2006 and 2016.
These divides create significant economic, social and political consequences. The places that feel left behind in the global economy are increasingly raising their voices, and governments cannot afford to turn a deaf ear. With broad-scale technological, demographic and environmental change intensifying, these loose threads in our social, political and economic fabric could turn into tears. Global megatrends are the buzzwords of the moment, but there is relatively little buzz about their geographic impacts, how our superstar metro areas, small cities, and rural areas will fare differently.
The OECD’s new publication, “Regional Outlook: Leveraging Megatrends in Cities and Rural Areas,” addresses many of these questions by showcasing how megatrends will bring new opportunities and challenges to each of these places. Let me provide some examples of this work.
The story of technological change could echo that of globalisation – widely shared benefits for consumers, but localised losses for certain communities. Digitalisation and other technological changes will increase the importance of knowledge-based services, reinforcing the existing advantages of large metro areas.
So while new jobs will be created in some places, others will lose out. Looking ahead, OECD data suggests that while the overall share of jobs at a high risk of automation in the OECD is 14%, it actually varies from 4% to 39% across OECD regions. In parallel to these economic changes, many rural areas are struggling to adapt to demographic changes, namely ageing populations, compounded by an outflow of young people moving for jobs in cities.
The story, however, is not so clear-cut – it is not purely urban versus rural. Large cities also risk becoming victims of their own economic success, with rising housing prices and an increasingly polarised labour market crowding out middle and lower-class households. While for rural areas, new technologies also open up new opportunities. Autonomous vehicles, distributed manufacturing, 3D printing, and virtual reality communication could bring us even closer to realising the long-promised “death of distance.”
As our 2019 Regional Outlook highlights, our policy choices today will determine whether these megatrends open up a new geography of opportunity or deepen the geography of discontent.
Of course, no level of government can respond adequately to these challenges alone. We have 36 national governments in the OECD, but over 137 000 elected regional and local governments. And most of you around the table today – including our Greek hosts – have implemented decentralisation reforms, to greater or lesser degrees, in the last decades.
Today, OECD regions and cities are responsible for 40% of public spending, 57% of total public investment, and an even higher share – 64% – for environment and climate-related investments. Regional and local governments find themselves on the frontlines, and their capacities will make or break our response to many challenges.
This is why the OECD’s new report, Making Decentralisation Work: a Handbook for Policy-Makers comes at an essential time. As the report points out, it’s not about whether decentralisation is inherently good or bad. When done well, decentralisation can have important benefits: a higher degree of decentralisation, for example, is correlated with higher GDP as well as more public investment in physical and human capital, and education spending.
Ladies and Gentlemen,
Harnessing global megatrends. Preventing them from deepening regional divides. Ensuring they deliver the opportunities that will allow regions, cities and rural areas to thrive.
These are just some of the many important issues you will be discussing over the next two days and helping us to unlock the doors to a better, more inclusive and more sustainable future for all. The OECD is ready to work for you and with you, to design, develop and deliver better policies for better lives. Thank you.