REGIONAL COMPETITIVENESS: COMPARATIVE ADVANTAGES AND UNUSED RESOURCES by Vincenzo Spiezia OECD – Territorial Statistics and Indicators Regional and Urban Statistics Working Party meeting Luxembourg, 3-5 November 2004

OECD Territorial Development Committee policy focus is on policies to enhance regional competitiveness Working Party on Territorial Indicators statistical focus is to benchmark the policy debate how can each region valorise its underutilised resources

OECD Regions at A Glance (2005) 3 themes: Regions as actors of national growth; Making the best of local assets; Competing on the basis of regional well-being

OECD Regions at A Glance Regions as actors of national growth: factors of national growth tend to be strongly localised in a small number of regions so that promoting national growth would require improving the use of these factors within regions.

OECD Regions at A Glance Making the best of local assets: assess the economic performances of regions and identify unused resources that can be mobilised to improve regional competitiveness.

OECD Regions at A Glance Competing on the basis of regional well-being: different dimensions of well-being (accessibility, health, education, security) are key factors to improve regional competitiveness.

1. Regions as the actors of National Performances From 1996 to 2001, employment growth varied significantly among OECD countries… …but the differences in employment growth were even larger among regions within countries.

1. Regions as the actors of National Performances 69 % of job losses in OECD countries was due to only 10 % of regions. 10% of regions explained for 56% of employment creation in OECD countries.

1. Regions as the actors of National Performances Concentration of unemployment is the highest in Australia and Canada and the lowest in the Slovak Republic. On average, 37 per cent of national unemployment in 2001 was concentrated in only 10 per cent of regions.

1. Regions as the actors of National Performances About 47 per cent of unemployment in OECD countries is concentrated in urban regions. Concentration of unemployment does not mirror concentration of the labour force.

1. Regions as the actors of National Performances Regional policy may give a significant contribution to the reduction of total unemployment

2. Making the best of local assets Identifying Unused Resources Methodology To compare regions against a common benchmark 3 Benchmarks: National Averages OECD Average Regional Type (Urban / Rural)

What explains regional differences in GDP per capita? Average Labour Productivity GDP . Employment at the workplace Employment rate Employment at the workplace Labour force at the workplace Commuting rate Labour force at the workplace. Resident labour force Activity rate Resident labour force Resident population

What explains differences in Average Labour Productivity? Productivity is higher in Manufacturing than in Agriculture or Services Sectoral Specialisation Technology & Infrastructures

What explains differences in Employment Rates? High-skills individuals have higher employment rates than low-skills ones Labour Force Skills Labour Market Efficiency

What explains differences in Activity Rates? Activity rates are decreasing with age Age-profile of the population Labour market participation

Identifying unused resources Natural Endowments Unused Resources Specialisation -Natural resources -Geographic location -Rural or urban type -Demographics -Infrastructures -Transportation -Tourism facilities -Labour market -Human capital -Social capital Technology & Infrastructure Skills Labour market Ageing Participation Commuting

Identifying unused resources Natural Endowments Unused Resources Specialisation Specialisation Technology & Infrastructure Technology & Infrastructure Ageing Skills Skills Commuting Labour market Labour market Ageing Participation Participation Commuting

Benchmark 1: National Looking at selected regions in Spain . . . . . . . -40% -20% 0% +20% +40% Comparing GDP per capita of the region to the national average: What is the contribution of each component to the percent difference? Percent contribution of each component Presentation to the OECD Territorial Development Policy Committee, November 27, 2003

Benchmark 1: National Looking at selected regions in Spain . . . . . . . -40% -20% 0% +20% +40% Comparing GDP per capita of the region to the national average: What is the contribution of each component to the percent difference? Percent contribution of each component Presentation to the OECD Territorial Development Policy Committee, November 27, 2003

Benchmark 1: National Looking at selected regions in Spain . . . . . . . -40% -20% 0% +20% +40% Comparing GDP per capita of the region to the national average: What is the contribution of each component to the percent difference? Percent contribution of each component Presentation to the OECD Territorial Development Policy Committee, November 27, 2003

Benchmark 1: National Looking at selected regions in Spain . . . . . . . -40% -20% 0% +20% +40% Comparing GDP per capita of the region to the national average: What is the contribution of each component to the percent difference? Percent contribution of each component Presentation to the OECD Territorial Development Policy Committee, November 27, 2003

Benchmark 1: National

Benchmark 2: OECD Average Regional variables are compared to the OECD Average Effects of performance factors are measured as US $ PPP Above average = “Gains” Below average = “Losses” OECD Territorial Level 2

Regional differences in real GDP per capita, 2000 Europe OECD average = 23,833 US $ (PPP)

Gains and losses in GDP per capita due to sectoral specialisation, 2000 - North America

Gains and losses in GDP per capita due to average productivity, 2000 - Europe

Gains and losses in GDP per capita due to employment rates 2000 - Europe

Gains and losses in GDP per capita due to age of population 2000 - Australia

Labour market pressure due to ageing, 2000 North America

Gains and losses in GDP per capita due to participation rates 2000 – Japan

Benchmark 3: Regional Type OECD Regional Typology 3 criteria: Population density: a community is rural if density < 150 inhabitants < (500 in Japan) % of population in rural communities: > 50%  Predominantly Rural (PR) < 15 %  Predominantly Urban (PU) Between 50 and 15 %  Intermediate (IN) Urban centre: > 200K Rural  Intermediate > 500K Intermediate  Urban

GDP per capita by regional type In most OECD countries PU > IN > National Average > PR Exceptions: Canada Finland Greece Ireland Korea US IN < NA

How much is explained by the Typology ? GDP per capita National Average Rural Average Regional Type Rural Region Regional Type Region Specific

How much is explained by the Typology ? GDP per capita 81% 60% 62% 63% 65% 66% 69% 76% 77% Japan Portugal Hungary United States Denmark Austria Sweden Finland France Norway Czech Republic Slovak Rep. Ireland 56% OECD 22% 32% 35% 38% 44% 45% 48% 55% 56% Korea Australia (TL2) Canada (TL2) U.K. Netherlands Germany Belgium Italy Mexico (TL2) Spain Greece

Impact of Regional Types on GDP per Capita Differences from national averages explained by the OECD Regional Typology 500 1,000 Kilomètres From 0% to 25% From 25% to 50% From 51% to 75% From 76% to 100%

Impact of Regional Types on GDP per Capita Differences from national averages explained by the OECD Regional Typology 250 500 Kilomètres From 0% to 25% From 25% to 50% From 51% to 75% From 76% to 100%

Impact of Regional Types on GDP per Capita Differences from national averages explained by the OECD Regional Typology 500 1,000 Kilomètres From 0% to 25% From 25% to 50% From 51% to 75% From 76% to 100%

Impact of Regional Types on GDP per Capita Differences from national averages explained by the OECD Regional Typology From 0% to 25% From 25% to 50% From 51% to 75% From 76% to 100%

Impact of Regional Types on GDP per Capita Differences from national averages explained by the OECD Regional Typology From 0% to 25% From 25% to 50% From 51% to 75% From 76% to 100%

How much is explained by Regional Type ? Productivity 60% Age 57% Specialisation 54% Commuting 53% Activity rate 51% Employment rate 51%

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