The geographic distribution of population is explained by differences in climatic and environmental conditions that discourage human settlement in some areas and favour population concentration around a few urban centres. This pattern is reinforced by the increased availability of economic opportunities and wider availability of services stemming from urbanisation itself.

During the past 20 years, the population in OECD countries grew on average 0.6% per year, reaching 1.2 billion in 2012. According to the OECD classification of small regions (TL3), regional population ranges from about 450 inhabitants in Balance ACT (Australia) to more than 23 million in the region of New York-Newark-Bridgeport (United States).

Local factors matter in achieving sustained national growth. In fact, 10% of OECD regions were responsible for 38% of OECD gross domestic product (GDP) in 2010. In Greece, the 10% of regions with the highest output contributed half or more of the national GDP. On the other hand, GDP in Denmark, Belgium, the Slovak Republic and the Netherlands was more evenly distributed among regions, with the 10% of regions with the highest output accounting for no more than 25% of total GDP. Similarly, in Colombia, the Russian Federation and Brazil, the contribution to national GDP was regionally very concentrated ().

During 1999-2012, differences in annual employment growth rates across OECD countries were as large as 3.5 percentage points, ranging from -0.5% in Greece to 3% in Chile ().

The economic crisis has increased the gap in GDP per capita between leading and lagging regions in half of the OECD countries (). The highest increase in the gap between the best 10% performing regions and the bottom 10% regions, more than 8 percentage points, occurred in Ireland, Slovak Republic and Denmark. However, two patterns are observed. In Ireland, the increase of regional inequalities was due to a faster worsening of the poorest regions compared to richest ones. In the Slovak Republic and Denmark, both the poorest regions got worse off and the richest regions got better ().

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.

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.

Regional differences in gross domestic product (GDP) per capita within countries are often larger than among OECD countries. According to the Gini index, the emerging economies – Indonesia, the Russian Federation, Colombia and Brazil – displayed the greatest disparity in GDP per capita in 2010, with Chile, Mexico, the Slovak Republic and Turkey among the OECD countries ().

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

Expenditures and personnel employed in research and development (R&D) are common proxies to measure a region’s investment in innovation.

Patent application is an indicator of inventive activity and the analysis of regional patenting helps assess the spatial distribution of innovation. Patents are one of the mechanisms used to appropriate the results of investments in intangibles. They are a good proxy of innovation efforts; however, patenting activity is strongly associated with sectoral patterns, since some economic sectors (i.e. pharmaceuticals and electronics) tend to show higher patenting trends due to the type of innovative activity than other sectors (i.e. textiles or other low-tech sectors).

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 in innovation between the two regions.

Scientific publications and the analysis of citations across regions are commonly used as indicators of the progress of science in countries and possible collaborations among researchers in different regions. Worldwide scientific publications are concentrated in a few countries. The top five countries, United States, China, United Kingdom, Germany and Japan, account for almost 60% of the publications in 2010. When considering the number of publications per capita, Switzerland and the Scandinavian countries rank among the highest ones (). Scientific publications show high regional disparities, with in general, one or two regions leading the production as is the case for the regions of Inner London West (United Kingdom) and Basel-Stadt (Switzerland) ().