OECD World Forum “Statistics, Knowledge and Policy”, Palermo, November Territorial Indicators for Regional Policies Vincenzo Spiezia Head, Territorial Statistics and Indicators, OECD

Territorial Indicators for Regional Policies Vincenzo Spiezia OECD – Territorial Statistics and Indicators OECD World Forum Palermo (Italy) 10 November 2004

OECD Territorial Development Committee Territorial Development Committee Policy focus: Policy focus: to enhance regional competitiveness Working Party on Territorial Indicators Working Party on Territorial Indicators Statistical focus: Statistical focus: to benchmark the policy debate

OECD 2 “policy” questions for “statistics” 2 “policy” questions for “statistics” 1.Why does regional matter? National performances are driven by a small number of regions 2.What objectives for regional policy? Making the Best of Local Resources

Answer 1 Regions as the Actors of National Growth

From 1996 to 2001, employment growth varied significantly among OECD countries… …but the differences in employment growth were even larger among regions within countries.

10% of regions explained for 56% of employment creation in OECD countries. 69 % of job losses in OECD countries was due to only 10 % of regions.

On average, 37 per cent of national unemployment in 2001 was concentrated in only 10 per cent of regions. Concentration of unemployment does not mirror concentration of the labour force.

Regional policy may give a significant contribution to the reduction of total unemployment

Answer 2 Making the Best of Local Resources

Identifying Unused Resources Methodology To compare regions against a common benchmark To compare regions against a common benchmark 3 Benchmarks: 3 Benchmarks: 1.National Averages 2.OECD Average 3.Regional Type (Urban / Rural)

Average Labour Productivity Employment rate Activity rate Commuting rate GDP. Employment at the workplace Labour force at the workplace Resident labour force Resident population Labour force at the workplace. Resident labour force What explains regional differences in GDP per capita?

What explains differences in Average Labour Productivity? Sectoral Specialisation Technology & Infrastructures Productivity is higher in Manufacturing than in Agriculture or Services

What explains differences in Employment Rates? Labour Force Skills Labour Market Efficiency High-skills individuals have higher employment rates than low-skills ones

What explains differences in Activity Rates? Age-profile of the population Labour market participation Activity rates are decreasing with age

Identifying Unused Resources Specialisation Technology & Infrastructure Skills Labour market Ageing Participation Commuting Natural Endowments Unused Resources -Natural resources -Geographic location -Rural or urban type -Demographics -Infrastructures -Transportation -Tourism facilities -Labour market -Human capital -Social capital

Specialisation Technology & Infrastructure Skills Labour market Ageing Participation Commuting Natural Endowments Unused Resources Specialisation Technology & Infrastructure Skills Labour market Ageing Participation Commuting Identifying Unused Resources

Benchmark 1: National Presentation to the OECD Territorial Development Policy Committee, November 27, 2003 Looking at selected regions in Spain Percent contribution of each component Comparing GDP per capita of the region to the national average: What is the contribution of each component to the percent difference? -40% -20% 0% +20% +40%

Presentation to the OECD Territorial Development Policy Committee, November 27, 2003 Looking at selected regions in Spain Percent contribution of each component Comparing GDP per capita of the region to the national average: What is the contribution of each component to the percent difference? -40% -20% 0% +20% +40% Benchmark 1: National

Presentation to the OECD Territorial Development Policy Committee, November 27, 2003 Looking at selected regions in Spain Percent contribution of each component Comparing GDP per capita of the region to the national average: What is the contribution of each component to the percent difference? -40% -20% 0% +20% +40% Benchmark 1: National

Presentation to the OECD Territorial Development Policy Committee, November 27, 2003 Looking at selected regions in Spain Percent contribution of each component Comparing GDP per capita of the region to the national average: What is the contribution of each component to the percent difference? -40% -20% 0% +20% +40% Benchmark 1: National

Benchmark 2: OECD Average Regional variables are compared to the OECD Average Regional variables are compared to the OECD Average Effects of performance factors are measured as US $ PPP Effects of performance factors are measured as US $ PPP Above average = “Gains” Above average = “Gains” Below average = “Losses” Below average = “Losses” OECD Territorial Level 2 OECD Territorial Level 2

Regional differences in real GDP per capita, Europe OECD average = 23,833 US $ (PPP) Between 10,000 and 15,000 US $ above the average Between 5,000 and 10,000 US $ above the average Less than 5,000 US $ above the average Less than 5,000 US $ below the average Between 5,000 and 10,000 US $ below the average Between 10,000 and 15,000 US $ below the average More than 15,000 US $ below the average Kilometres

Gains and losses in GDP per capita due to sectoral specialisation, North America Gains: more than 1,000 US $ Gains: between 500 and 1,000 US $ Gains: less than 500 US $ Losses: less than 500 US $ Losses: between 500 and 1,000 US $ Losses: between 1,000 and 3,000 US $ Losses: more than 3,000 US $ Kilomètres 1,0002,0000

Gains and losses in GDP per capita due to average productivity, 2000Europe Gains: more than 10,000 US $ Gains: between 5,000 and 10,000 US $ Gains: less than 5,000 US $ Losses: less than 5,000 US $ Losses: between 5,000 and 10,000 US $ Losses: more than 10,000 US $ Kilometres

Gains and losses in GDP per capita due to employment rates 2000Europe Gains: more than 1,000 US $ Gains: between 500 and 1,000 US $ Gains: less than 500 US $ Losses: less than 500 US $ Losses: between 500 and 1,000 US $ Losses: between 1,000 and 2,000 US $ Losses: more than 2,000 US $

Gains and losses in GDP per capita due to age of population North America Gains: more than 3,000 US $ Gains: between 2,000 and 3,000 US $ Gains: between 1,000 and 2,000 US $ Gains: between 500 and 1,000 US $ Gains: less than 500 US $ Losses: between 500 and 1,000 US $ Losses: more than 1,000 US $ 1,0002,000 Kilomètres

Gains and losses in GDP per capita due to participation rates 2000 – Japan Gains: more than 2,000 US $ Gains: between 1,000 and 2,000 US $ Gains: less than 1,000 US $ Losses: less than 1,000 US $ Losses: between 1,000 and 2,000 US $ Losses: between 2,000 and 3,000 US $ Losses: between 3,000 and 5,000 US $ Losses: more than 5,000 US $ Kilometres 1005

Benchmark 3: Regional Type OECD Regional Typology 3 criteria: 1.Population density : a community is rural if density < 150 inhabitants < (500 in Japan) 2.% of population in rural communities : > 50%  Predominantly Rural (PR) > 50%  Predominantly Rural (PR) < 15 %  Predominantly Urban (PU) < 15 %  Predominantly Urban (PU) Between 50 and 15 %  Intermediate (IN) Between 50 and 15 %  Intermediate (IN) 3.Urban centre : > 200K Rural  Intermediate > 200K Rural  Intermediate > 500K Intermediate  Urban > 500K Intermediate  Urban

GDP per capita by regional type In most OECD countries PU > IN > National Average > PR Exceptions: IN < NA Canada Finland Greece Ireland Korea US

How much is explained by the Typology ? Regional Type Region Specific National Average Rural Average Rural Region GDP per capita

22% 32% 35% 38% 44% 45% 48% 55% 56% Korea Australia Canada U.K. Netherlands Germany Belgium Italy Mexico Spain Greece 56% OECD USA 81% 60% 62% 63% 65% 66% 69% 76% 77% Japan Portugal Hungary Denmark Austria Sweden Finland France Norway Czech Rep. Slovak Rep. Ireland How much is explained by the Typology ?

GDP per Capita Differences from national averages explained by the OECD Regional Typology From 0% to 25% From 25% to 50% From 51% to 75% From 76% to 100%

GDP per Capita Differences from national averages explained by the OECD Regional Typology From 0% to 25% From 25% to 50% From 51% to 75% From 76% to 100%

GDP per Capita Differences from national averages explained by the OECD Regional Typology From 0% to 25% From 25% to 50% From 51% to 75% From 76% to 100%

GDP per Capita Differences from national averages explained by the OECD Regional Typology From 0% to 25% From 25% to 50% From 51% to 75% From 76% to 100%

05001,000 Kilomètres GDP per Capita Differences from national averages explained by the OECD Regional Typology From 0% to 25% From 25% to 50% From 51% to 75% From 76% to 100%

51% 53% 54% 57% 60% Employment rate Activity rate Commuting Specialisation Age Productivity How much is explained by the Typology ?

Issues for Future Research 1.Regional GDP: Not available in New Zealand and Switzerland. Not available in New Zealand and Switzerland. Only for Large Regions (TL2) in Australia, Canada, Mexico, Turkey and USA. Only for Large Regions (TL2) in Australia, Canada, Mexico, Turkey and USA. Methodology for Small Regions (TL3) is controversial. Methodology for Small Regions (TL3) is controversial.

Issues for Future Research 2. Employment by Industry : Only 3 macro sector for Small Regions (TL3) Only 3 macro sector for Small Regions (TL3) Effect of specialisation is underestimated Effect of specialisation is underestimated

3.Average Productivity is the main factor of competitiveness : Statistics on capital and infrastructure are rare. Statistics on capital and infrastructure are rare. Effects of technology and skills cannot be introduced in this framework. Effects of technology and skills cannot be introduced in this framework. Social capital and information spillovers are hard to measure. Social capital and information spillovers are hard to measure. Issues for Future Research

4.Rural/Urban works better in some countries than in others : OECD Typology need to be refined. OECD Typology need to be refined. Inclusion of geographic indicators (distance, land use). Inclusion of geographic indicators (distance, land use). Issues for Future Research

Further Information OECD Regions at A Glance 2005 OECD Regions at A Glance 2005 OECD Website: OECD Website: indicators