Presenation on Productivity, Regional Policy and Economic Governance made at the EU Cohesion Policy Conference in Bratislava on “Past Evidence, Current Experience and Future Perspectives” held in Bratislava, Slovak Republic on 15-16 September. Presentation by Mr. Joaquim Oliveira Martins, Head Regional Development Policy Division. More info: www.oecd.org/gov/regional-policy/

1. PRODUCTIVITY, REGIONAL
POLICY AND ECONOMIC
GOVERNANCE
EU COHESION POLICY CONFERENCE
BRATISLAVA, 15-16 SEPT 2016
Joaquim Oliveira Martins
Regional Development Policy Division, OECD

2. THE OECD PRODUCTIVITY
PROBLEM IS TO SOME EXTENT A
REGIONAL ISSUE

3. Productivity growth of frontier regions
outpaces that of most regions
Notes: Average of top 10% and bottom 10% TL2 regions, selected for each year. Top and bottom regions are the aggregation of
regions with the highest and lowest GDP per worker and representing 10% of national employment. 19 countries with data included.
Averages
of top
10%
(frontier),
bottom
75%, and
bottom
10%
(lagging)
regional
GDP per
worker,
TL2
regions
50 000
60 000
70 000
80 000
90 000
100 000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
USD PPP per employee
Frontier regions Lagging regions 75% of regions
1.6% per year
1.3% per year
1.3% per year

4. Where are the frontier and the catching-
up regions? TL2s, 2000-2013
0
10
20
30
40
50
60
70
80
Mostly Urban (127) Intermediate (62) Mostly Rural (100)
%
Frontier (41) Catching-up (65) Keeping pace (107) Diverging (76)
70% of mostly urbanfrontier
regionscontain very large cities
75% of divergingmostly urban
regionscontain very large cities

5. How regional catching-up compounds into
national labour productivity growth?
Annual average growth in real per worker GDP between 2000-2013 (or
closest year available).
 Regional catching-up can play an
important role for national
productivity growth

6. Region’s contributions to national growth vs.
labour productivity growth: Austria
Contribution to labour productivity growth, 2000-13 Percentage contribution to national GDP growth, 2000-13
Notes: The contribution of a region is defined as the difference between
the national annual average labour productivity growth rate and the same
rate excluding the indicated region.
Notes: Percentage contribution shows the share of total GDP growth that
was due to growth in the indicated region. Total contribution sums to
100%.

7. Region’s contributions to national growth vs.
labour productivity growth: UK
Contribution to labour productivity growth, 2000-13 Percentage contribution to national GDP growth, 2000-13
Notes: The contribution of a region is defined as the difference between
the national annual average labour productivity growth rate and the same
rate excluding the indicated region.
Notes: Percentage contribution shows the share of total GDP growth that
was due to growth in the indicated region. Total contribution sums to
100%.

8. The tradable sector appears to make the
difference: due to “unconditional” convergence?
All tradable sectors, TL2 regions
Notes: Tradable sectors are defined by a selection of the 10 industries defined in the SNA 2008. They include: agriculture (A), industry
(BCDE), information and communication (J), financial and insurance activities (K), and other services (R to U). Non tradable sectors are
composed of construction, distributive trade, repairs, transport, accommodation, food services activities (GHI), real estate activities (L),
business services (MN), and public administration (OPQ).
20
25
30
35
40
45
50
Frontier Catching-up Diverging Frontier Catching-up Diverging
Tradable GVA share Tradable employment share
2013 2000
%

9. A ROLE FOR POLICIES

10. • Economy-wide structural reforms help regional
catching-up, more so if complemented by place-
based policies
• Well-designed and well-implemented public
investments may support regional catching-up
(cf. OECD Governance of Public Investment
Toolkit)
• Multi-level governance and territorial reforms
can unlock productivity potential and support
inclusion
Broad policy responses

11. • Regional development policy most focused on growth
and productivity
• Address urban policy split between transport, spatial
planning, housing and social inclusion
• Reform of metropolitan areas can enhance the effect of
labour market, product market and innovation policies
• Rural policies often remain sectoral (e.g. agriculture),
but efforts to broaden the scope: focus on the economics
of low-density areas and rural-urban linkages
(forthcoming OECD Regional Outlook 2016)
Specific role for regional policies

12. The role of subnational governments
needs to be more widely recognised
12

13. Governments need a better governance
of regional, rural and urban policies
Reported lead ministries or entities across three policy fields
13

14. • Regional policies are important for
national productivity growth
• Their contribution is even greater when
considering the contribution of
environmental and social dimensions of
well-being
• Thus, they have to be properly integrated
in the structural policy package for
inclusive growth
Bottom-line

15. THANK YOU!