This third edition of the Regional Outlook continues to emphasise the untapped growth, productivity and well-being potential associated with cities and regions. The first edition of the Regional Outlook in 2011 identified at least two major trends requiring a better integration of the subnational perspective in OECD policy agendas. One trend was the persistent low productivity growth in most OECD countries. To tap into broader sources of productivity gains, the Regional Outlook 2011 was advocating a more integrated strategy, consolidating economy-wide structural policies by complementing them with place-based policies. A second trend is the observed disconnect between the quest for productivity on one side, and individual well-being on the other, that has generated the need to consider the three pillars of efficiency, equity and environmental sustainability. Subsequently, the Regional Outlook 2014 reckoned that well-being is intrinsically local and needs to be constructed by aligning policies from the top to the relevant scale: the places where people live and work.

Typology of regions with respect to productivity

Regions matter for building productive economies and inclusive societies. This third edition of the OECD Regional Outlook shows that while gaps in GDP per capita across OECD countries have narrowed over the last two decades, within their own borders countries are witnessing increasing income gaps among regions, cities and people. Leading regions and cities are now competing more with global peers than with others in the same country. There will always be interregional gaps, but those regions lagging behind have opportunities to catch up in terms of social and economic development. By helping to fuel the catching-up machine, countries can reap a double dividend of both increased aggregate productivity and inclusion.