Regions will drive the success of the Sustainable Development Goals

regions 2016Rolf Alter, Director of the OECD Public Governance and Territorial Development Directorate @raltergov

The ratification of the Sustainable Development Goals (SDGs) at the UN General Assembly in September 2015, composed of 17 goals and 169 targets, set a global agenda for achieving environmental sustainability, social inclusion and economic development by 2030. They provide a set of ambitions to whose realization all countries must contribute. One of the challenges is adjusting our focus, looking beyond national approaches to the powerful role that regions and cities play. The global agenda will require local data, the engagement of many stakeholders and all levels of government, and improved government capacity to steer and manage the delivery of public policies for inclusive growth.

Regions at a Glance 2016 makes a critical contribution to advancing this global agenda, providing disaggregated data and unveiling the differences within countries that otherwise remain hidden behind national averages.

For the first time, the assessment of well-being outcomes across OECD regions includes a range of dimensions, from income and jobs to health, the environment or civic engagement. It can help countries pursue policy goals that take into account the specific conditions of regions and incorporate local solutions.

These new data are revealing. For example, average life expectancy at birth in Mississippi, USA, is 75 years, 6 years less than in Hawaii. Differences within some cities are even more staggering: for example, there is a 20-year gap in life expectancy between neighbourhoods in London; this is more than twice the 8-year gap among OECD countries. Similarly, while gaps across OECD regions have narrowed over the last decade in well-being dimensions such as education and access to services, gaps have increased in income, air pollution and safety. In 2014, the difference in unemployment rates among all OECD regions was above 30 percentage points – almost 10 percentage points higher than the difference in unemployment among OECD countries.

The SDGs will not be achieved without the full engagement of a broad spectrum of stakeholders, including the people living in the world’s cities. Metropolitan areas, home to about half of the population of the OECD, are critical to the economic prosperity of countries, contributing to 62% of GDP growth of the OECD area in the period 2000-13. Household incomes were 17% higher in metropolitan areas than elsewhere in 2013. However, metropolitan areas are also host to greater inequality than their respective countries, and these inequalities grow as cities become more populated.

This is not just about income: inequality encompasses many dimensions of life. In 2014, 53% of the OECD urban population was exposed to levels of air pollution higher than those recommended by the World Health Organisation. If unchecked, these disparities will grow as urbanisation continues in OECD countries. A holistic approach is required to ensure that cities are inclusive, sustainable and safe.

The challenge is to ensure that all levels of government are implicated in the implementation of the SDGs. OECD data show that regional and local governments play crucial roles in the well-being of today’s and future generations. For example, 70% of subnational government (SNG) spending goes to education, health, economic affairs and social expenditures. At the same time, Regions at a Glance documents how spending responsibilities are shared across central and subnational governments. But aligning priorities between national and subnational governments and ensuring the capacities and resources needed for implementation remain critical challenges.

New data from an OECD-EU Committee of Regions survey of European regional and local authorities show that the lack of co-ordination across sectors and levels of government, red tape, and excessive administrative procedures are the top challenges for infrastructure investment at the subnational level.

The SDGs, UN Conferences on Climate Change, and the New Urban Agenda of Habitat III offer opportunities to refocus our attention on multi-level policy actions and on local data. Within this context, Regions at a Glance 2016 is an important contribution to creating pathways from the local level to meeting global goals.

Useful links

OECD Forum 2016 – Inclusive Cities

 Sustainable Development Goals and Public Governannce

OECD work on Cities

OECD Regional Well-Being

OECD & Regional Development

Better policies for better lives – this time, in your region

Regional wellbeing logoToday’s post is by Rolf Alter, Director of the OECD Public Governance and Territorial Development Directorate.

Six years have passed since the beginning of the global financial crisis, yet a large number of countries are still playing catch-up. The impact of the crisis, however, was not only national. Many regions are also struggling to return to the levels of prosperity that they enjoyed before the crisis. Going beyond national measures, an in-depth analysis of OECD regions reveals massive disparities within countries, with some regions faring much worse than others. OECD countries have always had some level of spatial inequality, but these disparities increased significantly since the onset of the crisis, and reducing them is now more than ever an imperative.

In order to address this challenge, the OECD established a framework to measure well-being at the local level. “How’s Life in Your Region?” presents an innovative set of tools to help policy makers benchmark the performance of their region in terms of the key indicators that define well-being for citizens. The ability to benchmark the performance of their region against other similar places should help them better target their policies and investments in order to have stronger impact on people’s daily lives.

This initiative responds to an urgent need for governments to learn lessons from the crisis. First, through its Better Life Initiative, the OECD explicitly recognises that there are indicators other than the usual economic measures (such as GDP) that capture the real aspirations and expectations of citizens. Moreover, well-being is defined by issues such as education, environmental sustainability, safety and housing that are essentially local in nature. To be effective in improving well-being, therefore, public policy needs to reflect the regional and local differences across these dimensions of well-being. The challenge that OECD has taken on is to identify a set of measures that capture well-being trends at the local level.

If used correctly, these well-being indicators have the potential not only to inform on what reforms should be focusing on, but also to track how well the implemented policies are performing. For example, the latest OECD Regional Outlook shows that in 10 OECD countries, over 40% of the national rise in unemployment since the crisis was concentrated in one region –underscoring the need to adopt a place-based policy approach to solving the severe labour market problems affecting that region.

The regional well-being initiative is a tool for government, but it is also designed to inform stakeholders outside the central government and in the non-government sector as well. While it can be tempting to leave policy makers the sole responsibility of improving well-being, it is much more effective to include various actors of society when it comes to building better communities: regional policy makers, but also the scientific community, the private sector, civil society and citizens. Regional well-being data can also be a tool to promote debate around policy choices. For that reason, the initiative also includes an effort to present data simply and clearly via the regional well-being data visualisation tool.

An example of this collaborative process can be found in Italy: when the province of Rome developed a well-being strategy in 2011, it held various meetings, forums and workshops with its constituents in order to help prioritise and determine the scale of the policy. A web-tool was created, allowing citizens to select the well-being dimensions that mattered the most to them, and ensuring that the feedback process was maintained over time.

Designing and implementing a regional well-being strategy is an iterative process. Priorities have to be established, and indicators that correspond adequately to the objectives must be selected. Progress must be monitored over time by looking at the results of the policies put in place and their evolution. Engaging a large number of stakeholders from the beginning of the initiative allows for increased ownership of the project, and therefore better accountability, legitimacy and overall efficiency. The use of indicators helps to track progress and keep momentum among stakeholders who can see that the targets they set are being reached or that new solutions are needed in cases in which the targets are not achieved.

Fostering well-being at the local level is a way to build stronger and more sustainable communities. The OECD Regional Well-Being framework provides a tool to help governments at all levels design and refine the policies that will help achieve this goal.

Useful links

OECD work on Regional Well-Being

How’s Life in your region?

BLI regionalHow’s life in your neighbourhood? Do you take reviving lungfuls of clean fresh air when you step outside your front door, or struggle to peer through a miasma of polluted particles? Is it easy to find a job or is unemployment higher than in neighbouring areas? When it comes to measuring wellbeing, national figures are all very well, but they cannot tell you what it’s like to live in a particular region or city.

Our day-to-day experience is essentially local – how easy is it to find a job, is there good Internet access and how clean is the air? And how can you find out these things about a new area?

The OECD’s Regional Wellbeing tool enables you to do just that. It compares wellbeing indicators for 362 OECD regions in eight topics – income, jobs, health, access to services, environment, education, safety, and civic engagement. A score has been calculated for each topic and you can compare your region with other regions in your own country, or with regions in other countries. So you can discover, for instance, that northeast England and Utah have a similar wellbeing level, or that life in Nunavut in Canada is similar to that in Chihuahua, Mexico, at least from a wellbeing standpoint.

But why should we care about regional wellbeing? For one thing, metropolitan areas are a major source of economic growth. More than 50% of economic growth and job creation in the OECD area occurs in the 275 metropolitan regions (each with a population of more than 500,000). But now in almost half (45%) of these metropolitan areas unemployment is higher than for the national economy. Once you know that a disproportionately high share of national unemployment is concentrated in a limited number of regions, and which ones they are, you can start to look at regional policies that can help. Does the workforce in the region have a good level of education? The regional wellbeing tool can tell you what proportion of the population has at least completed high school. In Korea the capital region scores highest on a national comparison, and in the top 28% among OECD regions.

If health is what matters to you most, then perhaps your region should take a leaf out of the Ile-de-France’s book. The area round the French capital is the top area in France in health, and in the top 1% among OECD regions.

The new regional tool follows many of the topics already covered at national level in the OECD Better Life Index, and brings wellbeing measures down to a more local level. So, how’s life in your region?

Regional power

Click to read the book on OECD iLibrary

Today’s post is from Kate Lancaster, editor in charge of publications on regional development at the OECD.

“Vous venez d’ou?” (Where are you from?) is not an unusual question in a large city like Paris. People come here from all over the world, for a holiday, for a business trip, for a temporary posting, or even to stay permanently. Ask them where they are from and they’ll probably tell you their nationality.  But talk to a French person in Paris and many will say that they aren’t really Parisian. They’re Alsatian or Breton, Basque or Norman. Even if it is their great-grandparents who came to Paris from the provinces, these people still claim a connection to the French region which their ancestors left to seek a better life. As the French singer Charles Aznavour memorably put it: “At 18 / I left my province / Determined to seize life with both hands … I was sure to conquer Paris”.

This story of migration from the provinces to the city, and the idea of the city as wealthy pinnacle of opportunity and the country as a sleepy, poor backwater, is an old one, seen in life and literature alike. But what are the economics behind this cultural trope?

Data show economic activity tends to concentrate in large cities and metropolitan regions. Indeed, a handful of such regions tend to account for a disproportionate share of total national growth in OECD countries. Typically, around 4% of regions generate about one-third of total growth, while the rest of the regions collectively account for the other 66% of growth, but individually do not contribute much.

Governments have long grappled with what to do about these underdeveloped regions. Do such regions even have anything to offer to the rest of the country?  At first glance, the answer might seem to be “no”. Very underdeveloped regions can impose high costs on national budgets, often in the form of quick-fix subsidies. And it has too often been assumed that there is no growth potential in these regions; they have been seen as a drag on national performance, not as potential assets.

The OECD believes otherwise. The recent report Promoting Growth in All Regions argues that relatively underdeveloped regions can in fact potentially be important sources of national growth and challenges the widespread view that rural is synonymous with decline.

Drawing on statistical analysis and a set of 23 case studies of OECD regions, the report shows that all regions have growth potential, particularly those that are currently lagging behind. It argues that promoting growth in all regions – whether rural or urban, underperforming or economic powerhouse – can drive total national economic growth and make economies and individuals alike less vulnerable to external shocks.

So, what should policy makers do? While there is no “one size fits all” solution, a few major themes emerge from the case studies.

First, education pays off and not just in the usual ways. We all know that the return on a university degree can be substantial, but these case studies demonstrate that improving skills of lower achievers – by reducing school dropout rates, focusing on marketable skills, and strengthening vocational training programmes – is equally important.

Second, infrastructure is not a cure-all. While building new roads, bridges and ports may create jobs, focusing only on improving infrastructure will not bring economic success. Big infrastructure projects do have a role to play – as a part of a larger policy package that brings improvements in a number of areas, from human capital to governance.

Third, the old saying “give people fish and they eat for day, teach them to fish and they eat for a lifetime” really is true. The case studies illustrate how dependence on top-down solutions and subsidies limits regional growth. Interestingly, the report also points out that the ways in which policy makers “frame” the challenges they are facing can make a big difference. As long as regional policy makers regard external subsidies as the main response to local difficulties, growth is unlikely to be substantial or sustainable. But reframing the policy challenge, looking at it in terms of local partners, institutions and investment, will encourage real growth and for the long term.

This doesn’t mean that regional underdevelopment is all in our heads, far from it. But it does mean that we must all put our heads together to help lagging regions to catch up with their better performing peers. This not only benefits national economies, but also contributes to a more inclusive and sustainable growth model. It helps to build a fairer society, in which no region and no one is left behind.

Useful links

OECD Regional Outlook 2011

OECD Regions at a Glance 2011

Regions and Innovation Policy

 

 

Cow power!

Click to learn more about Cow Power

Today’s post is from Kate Lancaster, editor in charge of publications on regional development at the OECD.

They say a picture is worth a thousand words, but what about its worth in cows? Behind this simple photo of a jolly tourist trolley stand a herd of 16 proud Vermont dairy cows, happily producing waste to help power this trolley. To be clear, their manure isn’t shoveled directly into an onboard furnace. Rather, the cows and the vehicle represent start and end points in a renewable energy success story.

This trolley runs thanks to “Cow Power”, a Vermont programme that gets dairy farmers to convert bovine waste into fuel, through the use of bio digesters. The digester produces methane gas, which fuels a modified natural gas engine, which in turn powers a generator to create electricity. Heat generated from this process keeps the digester warm, offsetting the farm’s fuel purchases. And the electricity generated is fed into the local energy utility’s system for distribution to customers.

To date, the programme has generated $1.8 million per year for Vermont farms, supporting a sector that has struggled, but which is of economic, cultural and historic value to the state. There are environmental payoffs too: Converting cow manure into methane biogas instead of letting it decompose reduces greenhouse gases. And together, eight Vermont cow power farms have the potential to eliminate 24 000 metric tons of carbon dioxide per year. The programme also benefits the electric utility, as consumers agree to pay a higher rate when they choose to use cow power. A final bonus? The processing of the waste makes the final solid byproduct a whole lot less smelly than manure straight from the source, something that the farmers and their neighbors alike appreciate.

But “cow power” is only one of the myriad renewable energy options being deployed in rural areas around the world.  Many OECD governments have invested large amounts of public money to support renewable energy development and are requiring significant quantities of such energy to be sold by energy providers, deriving from biogas, wind, hydropower, solar power, or other natural sources. A new OECD report, Linking Renewable Energy to Rural Development, asks what the true economic impact of these policies and investments is, based on case studies in 16 regions across Europe and North America. Can renewable energy really help develop rural economies?

Renewable energy is being championed as potentially significant new sources of jobs and rural growth, and as a means of addressing environmental and energy security concerns. However, there can be significant trade-offs among these three goals. For instance, large biomass heat and power plants can generate employment in rural communities, but may increase CO2 emissions due to changes in land use and the transportation of feed or livestock. Or consider that small-scale renewable energy installations typically use labour and equipment from international suppliers, thus limiting local job creation.

Can such trade-offs be mitigated? The authors think so, if renewable energy policy is well-thought out, flexible and carefully adapted to local conditions, cultures and opportunities. Renewable energy strategies should not be imposed from above, they suggest, but rather embedded in local economic development plans and undertaken with community involvement. Programmes such as the Community and Renewable Energy Scheme (CARES) – overseen by Community Energy Scotland (CES) – not only help provide greener sources of energy, but also build community cohesion, develop local confidence and skills, and support local economic regeneration.  

It is equally important to be realistic about what projects will work in a given place and economy, particularly if subsidies are limited or removed from the equation. Investment should be in those projects that are appropriate for their setting and viable on the market, or close to being so. Choosing relatively mature technologies such as heat from biomass, small-scale hydropower, and wind, is advisable. The Italian region of Puglia, for example, although long a producer of coal energy, has also invested in mature solar and wind technologies, and is seeing economic and environmental benefits.

Will cows soon be powering your buses? Will sheep be mowing your lawn? Such ideas are charming – and working, in certain communities. But the wider reality is that viable renewable energy policy is complex, and there are no shortcuts to rural development.

Useful links

OECD work on regional, rural and urban development

OECD work on green growth and sustainable development