In recent years, the economic and social costs of persistent disparities in economic performance across regions have become apparent. National economic growth is limited by the lagging productivity growth in some regions. Within affected regions, persistently high unemployment and stagnating or declining wages create economic hardship and diminish people’s confidence in a better future. As a consequence, there are populations in many OECD countries are increasingly discontent with the status quo and, not surprisingly, there is a geographic pattern to much of this discontent.

When considered at the scale of the OECD area, economic inequality across regions declined since the turn of the millennium. Between 2000 and 2015, inequality in regional GDP declined by 15% across the OECD and by 25% across Europe, driven by the catching up of regions in countries with comparatively lower income. However, in many OECD countries the economic disparities between the regions within the same country grew substantially over the same time period.

This chapter outlines trends in regional productivity growth and job creation (and destruction) over the past 15 years. Both convergence and divergence are evident across OECD countries and this chapter highlights the trade‑offs that countries and regions face in terms of inequality, growth and job creation. A particular focus in this chapter is on economic trends before and since the global 2007‑08 crisis and why some regions might have been more strongly affected than others.

The key challenge for policy is how to sustain aggregate growth while promoting catching up of lagging regions and job creation at the same time. This is a daunting challenge as there are some clear trade‑offs outlined in Chapter 1. This chapter considers two important characteristics of regions that support catching up in terms of labour productivity.

The previous chapters outlined the role of tradable sectors and of cities as sources and catalysts of productivity growth. This chapter considers two concrete aspects of global trade. The first aspect is the clustering of related traded activities within regions and the role of concentration and diversification in productivity growth. The second is the integration of regions in global trade relationships. Rather than exports themselves, “global value chains” measure the overall contribution of a region’s economy to products that are comprised of parts made in different countries and regions before being assembled into a final good.

Beyond regional policies, territorial economic outcomes are also affected by factors that are beyond the control of regional actors. These include national or global macroeconomic trends, as well as certain national policies and frameworks that may have a specifically important spatial dimension. This chapter first explores how macroeconomic frameworks and national structural policies have contributed to differences in regional economic performance. It thereafter explores more generally how institutional and governance settings affect regional economic outcomes.

This concluding chapter presents policy lessons to drive productivity growth and job creation in all types of regions. Building upon the analyses of the previous chapters and previous OECD research, this chapter offers somewhat concise answers to three different issues that have long surrounded regional development policies: an over‑reliance on non‑tradable sectors, a focus on “exogenous” growth stimuli rather than on local strengths and the challenge of diffusion of knowledge and innovations beyond the frontier.