Huge regional variations in economic and social conditions within a country require a rethink of the way governments design policies to boost growth and jobs, says a new OECD report.
The economic crisis has hit some areas far harder than others. The OECD’s first Regional Outlook calls on policy makers to pay greater attention to regional factors such as amenities, accessibility, size, infrastructure and demographics, industry specialisations and networks. The report focuses on the need for good governance and coordination of policy around these regional factors and rejects the idea that governments should rely on budget transfers to reallocate resources between rich and poor regions.
The Regional Outlook observes that policy-makers have traditionally looked to major cities to spur economic dynamism. But on average 70% of the economic growth of OECD countries occurs outside the big metropolitan hubs. And although predominantly rural regions can be among the slowest-growing regions in the OECD, they are also over-represented among the most dynamic. Contrary to popular belief, “rural” is by no means synonymous with economic decline, the report says.
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