INCLUSIVE GROWTH: A PLACE- BASED PERSPECTIVE

Transcription

1 INCLUSIVE GROWTH: A PLACE- BASED PERSPECTIVE OECD-DG JOINT RESEARCH CENTRE- AUSTRIAN INSTITUTE OF ECONOMIC RESEARCH ''A SYSTEMS APPROACH TO SOCIALLY AND ENVIRONMENTALLY SUSTAINABLE GROWTH' OECD, 3 MAY 2017 Joaquim Oliveira Martins (OECD/CFE)

2 Inclusive Growth needs to be constructed through an appropriate governance system

3 Source: OECD Regional Outlook, 2011 Constructing a supermodular policy matrix for Well-Being Figure 1.2. New Development Paradigm: A Policy Complementarity Matrix Efficiency Equity Environmental Sustainability Economic Policies Sustained growth Inclusive Growth Economic reforms may increase equity Green growth Green may Growth improve sustainability Social policies Social policies Inclusive may increase Growth efficiency (knowledge, trust) Social cohesion Environmentally Social sustainable social Ecology policies Environmental policies Green Green economy may boost innovation Growth Social policies can enhance inclusiveness; Social poor people are the Ecology most hurt by environmental degradation Sustainable Environment

4 Well-being is a place-based concept CITIES RURAL AREAS EFFICIENCY/INCOME + - ENVIRONMENTAL QUALITY - + SOCIAL DIMENSIONS: Public goods (e.g. Health, Education) + - SOCIAL DIMENSIONS: Community produced goods (e.g. Trust, Security) - + Well-being is the outcome of the different local dimensions 4

5 OECD place-based policy paradigm The OECD place-based policy paradigm is basically made of good structural economic policy with two main differences: It allows for spatial differentiation Calls for a specific investment in Governance to coordinate policies across levels of government, sectors and administrative boundaries Accordingly, the OECD place-based approach is based on: Identification of regional specific assets (or create absolute advantages to stimulate competition & experimentation across regions) Complementarities among sector policies at the regional (or local) level Multi-level governance mechanisms for aligning objectives & implementation

6 Increasing regional disparities may hinder national productivity performance

7 OECD economies have converged but, within countries, regions have diverged GDP per capita dispersion is now greater within countries than between countries

8 Disparities of household income are also large within regions Gini index of disposable income, 2011 (in selected OECD countries and their regions) Source: OECD Income Distribution Database and OECD Regional Well-being database 8

9 Well-being outcomes amplify the regional disparities Differences across regions in multidimensional living standards are larger (MLS index: income, jobs, health and inequality) Source: OECD (2016), Making Cities Work for All, OECD Publishing, Paris.

10 The productivity gap between frontier and lagging regions has increased USD PPP per employee Frontier regions Lagging regions 75% of regions 1.6% per year 60% increase 1.3% per year 1.3% per year Averages of top 10% (frontier), bottom 75%, and bottom 10% (lagging) regional GDP per worker, TL2 regions Notes: Average of top 10% and bottom 10% TL2 regions, selected for each year. Top and bottom regions are the aggregation of regions with the highest and lowest GDP per worker and representing 10% of national employment. 19 countries with data included.

11 Regional productivity catching-up could have a strong contribution to aggregate growth Type of regions Employment share in 2000 GDP share in 2000 Annual avg. GDP growth, GDP growth contribution Frontier 16.1% 20.1% 1.7% 21.9% Catching up 20.3% 18.2% 2.2% 25.3% Stable 38.9% 39.1% 1.3% 30.4% productivity gap Diverging 24.6% 22.6% 1.6% 22.4% OECD average 1.6% Note: Frontier regions are fixed for the period. In four countries the values for 2000 or 2013 were extrapolated from growth rates over a shorter time period as data for 2000 or 2013 were not available. The countries are FIN ( ), HUN ( ), NLD ( ) and KOR ( ).

12 Fat tails matter: regional contributions to aggregate OECD growth 1. A few big regional hubs are main drivers of growth, but many big cities are also making little growth contribution 2. Most economic growth occurs outside the hubs in a largely distributed way 3. The notion of an average region is meaningless Contributions to OECD-wide growth, TL2 regions Source: OECD (2011) Regional Outlook.

13 Distribution of the contributions to aggregate growth of OECD metropolitan areas Source: OECD (2013), Regions at Glance

14 What could make cities more productive and more inclusive?

15 Only 1/5 of OECD metro areas have grown inclusively Change in GDP pc and in Gini coefficient of household disposable income, Source: OECD (2016), Making Cities Work for All, OECD Publishing, Paris. 15

16 Productivity increases with City size even after controlling for sorting City productivity (normalised) Doubling the size of a city 3-5% productivity increase Source: Ahrend, R., E. Farchy, I. Kaplanis, A.C. Lembcke (2014), What makes cities more productive? Evidence on the role of urban governance from five OECD countries, OECD Regional Development Working Papers, No. 2014/05, OECD Publishing, Paris. 16

17 But administrative fragmentation is correlated with lower city productivity Source: Ahrend, R., E. Farchy, I. Kaplanis, A.C. Lembcke (2014), What makes cities more productive? Evidence on the role of urban governance from five OECD countries, OECD Regional Development Working Papers, No /05, OECD Publishing, Paris.

18 Income inequalities also tend to increase with city size Metropolitan population and income inequality, circa 2014 (controlled for income levels and country effect) Gini coefficient (component plus residuals) Calera Bruxelles / Brussel Miami Celaya McAllen Centro Oaxaca Albuquerque Houston de Juárez Santiago Osorno Dallas Los New Angeles York Cuernavaca IrapuatoEl Paso Querétaro New Orleans Tucson Chicago Pachuca Tuxtla Valparaíso de Gutiérrez Fresno Soto Bari Richmond Fort Worth Tampa Austin Toluca Philadelphia San Francisco Copenhagen Saint Louis Phoenix León Cleveland Indianapolis Atlanta Calama Toledo Mérida Acapulco Providence Temuco Baton Malmö Bologna Tampico Morelia Tulsa Clearwater/Saint Pittsburgh de Juárez Petersburg Nice Birmingham Jacksonville Oklahoma Nashville Charlotte Torino Stockholm Las San city Vegas Antonio Marseille Seattle San Rouge Toulouse Memphis Lyon Baltimore Orlando Boston Milano Diego Wien Sacramento/Roseville Detroit Roma San Fernando Aarhus Akron Graz Montpellier Iquique Talca Grenoble Benito RouenJuárez Curicó Valdivia Los Angeles Antofagasta Rennes Genova Firenze Strasbourg Bordeaux Milwaukee Puebla Napoli Guadalajara Xalapa Durango Linz Liège Dayton Nantes Palermo San Salt Lille Luis Lake Kansas Potosí City City Columbus Cincinnati Denver Venezia Ovalle Puerto Montt Saint-Etienne Toulon Catania Veracruz Hermosillo Chihuahua Culiacán Concepción Torreón Luisville Grand Saltillo Juárez Portland Göteborg Rapids Arica Chillán Aalborg Odense Gent Little Rock Rancagua Coquimbo-La Wichita Omaha Antwerpen Raleigh Washington Colorado Reynosa Serena Springs Punta Arenas Copiapó Madison Charleston Aguascalientes Harrisburg Des Moines Buffalo Quillota Mexicali Minneapolis Monterrey Norfolk-Portsmouth-Chesapeake-Virginia Tijuana beach San Antonio Columbia Linares Mexico City Albany Melipilla Ln of total metropolitan population 18

19 But administrative fragmentation is correlated with higher segregation of people Hypothesis: Fragmented metropolitan governance can facilitate segregation at the level of local units. Inequality between local jurisdictions, (Component plus residual) Administrative fragmentation Controlling for country fixed effects and other city characteristics (i.e. income, population, spatial structure), higher administrative fragmentation is associated to higher spatial segregation by income in different municipalities (cf. Brezzi, Boulant & Veneri, 2016) 19

20 Overly restrictive land use policies can harm inclusiveness via rising housing costs Land use regulations should aim to prevent sprawl but have to provide sufficient space to construct housing for growing populations Otherwise, housing costs rise Annual change house prices ( ) 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -1.0% -0.5% 0.0% 0.5% 1.0% Annual change in developed land per capita ( )

21 Incentives matter: make planning more flexible and foster good land use Public policies aimed at steering land use Spatial planning Transport planning Land use planning Environmental regulations Building code regulations Public policies not targeted at land use Tax policies Transport taxes and subsidies Fiscal systems and inter-governmental transfers Agricultural policies Energy policies How land is permitted to be used How individuals and businesses want to use land How land is used

22 Policies for inclusive growth in cities and regions

23 Policy shift towards Inclusive Growth Cohesion-oriented urban & regional policy Growth-oriented urban & regional policy Inclusive growth policy in cities & regions Objectives Compensating temporarily for location disadvantages of lagging areas Tapping underutilised potential in all areas for enhancing urban & regional competitiveness Fostering both equity & growth in cities & regions Unit of intervention Administrative regions/cities & firms Functional economic areas Functional urban areas (of all sizes) that reflect the reality of where people live and work Strategies Sectoral approach Integrated development projects for economic growth Multi-dimensional well-being Tools Subsidies & state aids Investment in infrastructure to exploit competitive advantages of different places Integrated policy packages that address both physical/ environmental capital and human/social capital Key actors Mainly central governments Different levels of government & business sector Partnerships across levels of government, as well as between public and private spheres, and civil society

24 Bottom-line Positive Economics (what to do?) need to be combined with Governance (How to do it?) in order to provide a better set of policies to deal with inclusive growth Place-based policies help introducing a systems approach to inclusive growth Place-based policies also support the construction of a more integrated structural policy package

25 THANK YOU!