• Climatic and environmental conditions together with economic opportunities and availability of services explain the geographic distribution of population within countries. In 2014, almost half of the population of the OECD (46%) lived in predominantly urban regions, which accounted for 6% of the total area. More than 70% of the population lived in predominantly urban regions in the United Kingdom, the Netherlands, and Australia ().

  • Today, half of the OECD population live in metropolitan areas – cities with more than 500 000 people.

  • Some regions generate larger gross domestic product (GDP) than others. In 2013, the OECD regions with largest GDP, representing 20% of total population, generated 26% of OECD GDP. In Hungary, Poland, the Slovak Republic, and the United Kingdom, regions with the highest economic output and totalling 20% of the population, contributed to at least one-third of the national GDP.

  • Regional differences in gross domestic product (GDP) per capita within non-OECD countries are often substantial and larger than among OECD countries. According to the Gini index, the emerging economies – Indonesia, Colombia and the Russian Federation – displayed the greatest disparity in GDP per capita in 2013, with Chile, Mexico, the Slovak Republic and Ireland showing greatest disparity among the OECD countries ().

  • In 2013, 281 metropolitan areas, where 49% of the OECD population lived, generated 57% of gross domestic product (GDP) and 51% of employment in the OECD area ().

  • Between 2000 and 2014, differences in annual growth of employment rates across OECD countries were as large as 2.3 percentage points, ranging from -0.6% in Portugal and Greece to 1.7% in Israel ().

  • Labour productivity growth is considered a key indicator to assess regional competitiveness and an essential driver of change in living standards. Regional living conditions are raised by continued gains in labour productivity, along with an increase in labour utilisation. In fact, only economies that manage to simultaneously sustain employment and productivity growth will increase their gross domestic product (GDP) per capita and maintain it in the long run.

  • Regions with the highest productivity in the country (known as ‘frontier regions’) play a central role in productivity growth and in the process of diffusing productivity gains within the country. A better understanding of the profiles of lagging regions and of how they can catch up is key to achieving inclusive growth. Between 1995 and 2013, the labour productivity in frontier regions increased by a yearly average of 1.6% compared to 1.3% for the lagging regions, widening the regional productivity gap by around 50%, from USD 21 000 to USD 31 000. This suggests that lagging regions benefit only partially from the growth of frontier regions. After the economic crisis of 2008, the gap stabilised, mainly due to the slowdown of productivity growth in the frontier regions ().

  • While deeply rooted in local history, geography, institutions and social capital, the production structure of regions keeps evolving over time as a result of both macroeconomic changes and economic policies at the national or subnational level.

  • The evolution of the economic disparity within a country is here measured by the growth of the difference in gross domestic product (GDP) per capita between the richest 20% of regions and the poorest 20% of regions. This gap has grown in the OECD area at an average rate of 0.3% yearly in the period 2000-13 ().

  • Metropolitan areas have contributed to 60% of employment creation across OECD countries in the past 15 years. However, the contribution to job creation varies substantially within and across countries. Metropolitan areas in Italy and Korea accounted for more than 80% of job creation between 2000 and 2014, compared to less than 30% in Switzerland and the Slovak Republic.

  • In a knowledge-based economy, many drivers of productivity are linked to innovation-related investments, such as skilled human capital or research and development (R&D). While it is expected that R&D investments or patenting activity concentrate in the most productive regions so as to maximize the return, such a concentration of innovation-related resources in just a few regions may limit the prospects for other regions to catch up if innovation does not travel across regions. Given this, a common goal for regional development policy is to reduce inter-regional disparities in these innovation factors by boosting performance in the lagging regions.

  • Entrepreneurship is an important driver of job creation, competitiveness and economic growth. Countries are therefore increasingly implementing policies to attract venture capital (VC) and business angels at the regional level (OECD, 2011). To attract VC into regions with few VC firms and low levels of investment by non-local VC firms, public policies generally attempt to create a favourable environment for entrepreneurship. This focus can help to remove obstacles for a nascent start-up market, including outside established industry clusters, and facilitate the attraction of VC investments.

  • The quality of human capital is central to increasing productivity, as the ability to generate and make use of innovation depends on, among other factors, the capacity and skill level of the labour force. The proportion of the labour force with tertiary education is a common proxy for a region’s capacity to produce and absorb innovation.

  • The percentage of regional patent applications with co‑inventors from another region, whether or not they belong to the same country, is an indicator of co-operation activity between the two regions.

  • Metropolitan areas are the places where most inventions take place. In 2011-13, 70% of all patent applications were granted in metropolitan areas for the 19 OECD countries where such data are available. The concentration of patent applications in metropolitan areas is above 70% both in countries with a high level of patenting activity, such as Japan and United States, and in countries with low level of patenting activity, Australia, Chile and Mexico. In Norway and Italy, on the other hand, metropolitan areas account for less than 40% of the country’s total patents ().