Regional Development

Productivity Policy for Places


An explicit focus on subnational drivers of regional productivity is needed to better understand recent productivity dynamics (e.g. growing disparities within countries) and to devise policy solutions that boost aggregate productivity and reduce inequalities

  • What's the issue?

Productivity is the main determinant of living standards. Productivity growth, however, has been falling since the beginning of the century in many OECD countries, accompanied by the increasing interregional divergence in productivity performance within countries. A sole focus on national drivers of productivity at the level of industries and firms appears to be ill-equipped to offer solutions that would contribute to closing the gap across regions. An explicit focus on the spatial dimension of productivity is needed in order to better understand the recent productivity dynamics and to devise policy approaches able to boost the aggregate productivity growth and to decrease interregional inequalities.


  • About the high-level expert workshops

The workshops are a part of the OECD-EC project “Productivity Policy for Places”. They consider the topic from five angles: The innovation-productivity paradox; Productivity in the private sector; Productivity in the public sector; Productivity and inclusiveness; and Productivity and resilience. The outcomes of the workshops will underpin a sythesis report and form the basis for a broader discussion with stakeholders on the future direction of policy design for sustainable transitions to more productive regions and cities. As such, the work will be relevant for policy-makers at all levels of government interested in improving the long-term perspective of regional policies and their contribution to sustainable economic growth.




Workshop 1: The Innovation Productivity Paradox

3 & 5 March 2021

Productivity growth is slowing down, despite increased spending on R&D and a policy focus on innovation. Analyses that try to link regional innovation expenditure and productivity performance typically fail to find a robust (positive) relationship. Some studies highlight the regional “absorptive capacity” as a mediating factor that needs to be taken into account. This is in line with the OECD work, which finds that growth only in economically advanced regions is positively associated with the R&D spending. Another reason is that global R&D expenditure is highly concentrated in certain (goods-producing) sectors and in certain (multi-national) firms. Despite these drawbacks, targets for R&D spending remain a key element of many innovation policies. Leveraging innovation for regional (productivity) growth requires a broader view.

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Thanos Fragkandreas: "Innovation-productivity paradox - implications for regional policy"

Raquel Ortega-Argiles & Philip McCann "The innovation productivity paradox

Workshop 2: Productivity in the Private Sector

24-25 March 2021

Private sector productivity is the main driver of regional productivity. There are sizable differences, however, in the productivity performance of manufacturing and services, the two major components of the private economy. Manufacturing has been at the forefront of productivity growth for decades, but gains are slowing down. Local services, on the other hand, are often considered as a drag on growth; yet, they account for more than half of employment in the OECD countries and regionsRegional policies will be a central element in facilitating positive transitions. The challenge for regions is to provide suitable framework conditions and incentives for the adoption of new technologies and supporting dynamic local entrepreneurial eco-systems to ensure that their economies avoid falling into a “middle-income trap”.

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Peter H. Egger: "Productivity in the private sector"

Giorgio Barba Navaretti & Borisav Markovic: "Place-based policies and the foundations of productivity in the private sector


Workshop 3: Productivity in the Public Sector

27-28 April 2021

The public sector accounts for a sizeable share of economic activity in the OECD countries. For many years, however, productivity in the public sector was not a topic of academic and policy conversation. Yet, the variety of public services is expanding and the delivery increasingly relies on new technologies and management methods. The trend of decentralisation allows tailoring service provision, budgeting and other arrangements to local needs potentially offering better “value for money” to residents. An effective public sector can enhance productivity in a city or a region. Co-ordinated planning across levels of government, as well as horizontally, plays an important role in facilitating access of workers to firms and vice versa. Delays due to cumbersome regulations, administrative procedures, or even lengthy court proceedings can adversely affect investment and entrepreneurial activity. Timely implementation of public works, monitoring and reporting requires more than the right framework but effective governance structures that ensure alignment of objectives and incentives across levels of government.

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Tamara Krawchenko: "Public sector and productivity"

Patrick Dunleavy: "Regional and local productivity in the public sector"


Workshop 4: Inclusive Productivity?

18-19 May 2021

Are productivity gains inclusive? It cannot be taken for granted that technological advances, innovation and entrepreneurship will automatically lead to stronger, more sustainable growth. Nor is there any guarantee that the benefits of higher levels of growth or productivity – if and when they emerge – will be broadly shared across the population. Many channels raise productivity of individual workers, but not necessarily for workers of all skill levels. Technological progress is often “skill-biased.” Capital investment is often “labour saving,” while “reallocation” is highly disruptive in the lives of people. What’s more, the capacity of regions to absorb shocks in the labour market and transition workers towards new sectors can be limited. The practical challenge is to link productivity growth with gains in well-being and inclusiveness. 

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Jens Suedekum: "Productivity policy for places – inclusive productivity"


Workshop 5: Productivity and Resilience

9-10 June 2021

The ongoing COVID-19 crisis has demonstrated the uneven effects of recent productivity-enhancing technological advances and economic restructuring on the ability of places to withstand the shock.

Did the pursuit of productivity growth reduce resilience of places in the face of the pandemic and the subsequent economic crisis? How can places be prepared to face similar crises without compromising their productivity performance and what is the role of policy? Which old and emerging solutions are promising? 

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Alessandra Faggian & Andrea Ascani: "Productivity and resilience: A post-COVID-19 perspective"


Alexandra Tsvetkova []

Alexander Lembcke []