Across much of the developed world, inequality between different people living in the same country has worsened in the years since the global economic crisis. In economic terms, the gap in per-capital GDP between leading and lagging regions has widened in half of the OECD's 34 member countries since 2008. There are also big disparities in local indicators of quality of life, from education to air quality. Where we've seen reductions in regional inequality, this has been due more to the decline of better-off regions than to worse-off regions catching up.
The OECD's work on regional data enables us to go beyond national averages and zoom in on how people's lives look at a local level. Our interactive regional wellbeing website (www.oecdregionalwellbeing. org) lets users compare 362 regions across 34 countries in nine areas: access to services, civic engagement, education, environment, health, housing, income, jobs and safety. For example, it shows that in the United Kingdom, Northern Ireland has the cleanest air but the lowest voter turnout and in Belgium, the Brussels region has the highest level of unemployment.
"The challenge for governments, both national and regional, is to find ways to target investment so as to generate growth and address… disparities in wellbeing to be more inclusive"
Being able to dig into regional-level wellbeing data allows policymakers – and voters – to see whether economic growth translates into better quality of life and thus can help guide future policy.
The data show that in 10 OECD countries, more than 40 per cent of the rise in unemployment since 2008 was concentrated in one region. The data also illustrate the way youth unemployment is concentrated in Europe's southernmost regions, underscoring the need for locally tailored solutions.
Many of these solutions can be put into practice most easily and effectively in cities. The fact that two out of three people in OECD countries live in cities make them crucial to improving economic growth and life quality. The 2014 OECD regional outlook provides evidence that getting cities right can make a real difference to growth and wellbeing at the national level. Reducing CO2 emissions of cities also has massive implications at the global scale.
Cities bring economic benefits in terms of improved efficiency and higher productivity, but they also have costs. Just as wages tend to be higher in cities, so do prices. And non-monetary costs such as air pollution levels, noise and travel times between home and work also tend to rise in cities. Better organisation of cities can mitigate some disadvantages and applying smarter policies in the metropolitan areas around cities can also help, by linking urban centres more closely with their rural surroundings.
At the OECD we believe urban policies should focus not only on the challenges posed by cities, but also on the opportunities they offer. Cities drive national growth performance and serve as testing grounds for policies that can improve economic and overall wellbeing and reduce regional disparities.
"Cities bring economic benefits in terms of better efficiency and higher productivity, but they also have costs"
At all levels, public investment is one of the most growth-enhancing forms of public spending. Since the crisis, sub-national governments have often had to cut back investment in order to maintain spending on welfare, health and education. Faced with limited scope for controlling other forms of spending, governments have had to make public investment an adjustment variable. At the same time, private investment has also contracted.
This makes it more important than ever for governments to learn to do better with less and find new ways to attract private investment. Municipal and metropolitan reforms are one opportunity to increase investment efficiency, and have been taken up recently by almost half of OECD countries.
Coordination between different levels of government is also key to getting the most out of public investment and reducing wastage. With over 90,000 sub-national governments in the EU28, that coordination is complex. This is particularly true for European countries, regions, cities and towns tapping European regional policy funds, given the need to work across many levels of government.