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The Contribution of Regions to Aggregate Growth in the OECD

Author

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  • Enrique Garcilazo
  • Joaquim Oliveira Martins

Abstract

This article investigates the contribution of regions to aggregate growth. We find a great degree of heterogeneity in the performance of Territorial Level 3 (TL3) regions of the OECD (Organization for Economic Cooperation and Development). The regional contributions to aggregate growth follow a power law, with a coefficient around 1.2 (in absolute terms). This implies that Few-Large (FL) regions contribute disproportionately to aggregate growth whereas Many-Small (MS) individual regions contribute only marginally. Because the large number of these smaller regions and the decay of their contribution to growth is slow (generating a fat tail distribution), their cumulated contribution is actually around two-thirds of aggregate growth.

Suggested Citation

  • Enrique Garcilazo & Joaquim Oliveira Martins, 2015. "The Contribution of Regions to Aggregate Growth in the OECD," Economic Geography, Taylor & Francis Journals, vol. 91(2), pages 205-221, April.
    • Handle: RePEc:taf:recgxx:v:91:y:2015:i:2:p:205-221
    DOI: 10.1111/ecge.12087
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    Cited by:

    1. Lengyel, Imre & Varga, Attila, 2019. "Előszó," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 597-606.
    2. repec:spo:wpmain:info:hdl:2441/32ctbi8fbq8j5aom2j69qam6tf is not listed on IDEAS
    3. Benjamin Montmartin & Ludovic Dibiaggio & Lionel Nesta, 2018. "Regional Alignment and Productivity Growth," Sciences Po Economics Publications (main) halshs-01948337, HAL.
    4. Paolo Di Caro & Ugo Fratesi, 2022. "One policy, different effects: Estimating the region‐specific impacts of EU cohesion policy," Journal of Regional Science, Wiley Blackwell, vol. 62(1), pages 307-330, January.
    5. Sabine D'Costa & Enrique Garcilazo & Joaquim Oliveira Martins, 2016. "Impact of Structural Reforms on Regional Growth: Distance to the Frontier Matters," SERC Discussion Papers 0203, Centre for Economic Performance, LSE.
    6. Roberta Capello & Andrea Caragliu, 2021. "Merging macroeconomic and territorial determinants of regional growth: the MASST4 model," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 66(1), pages 19-56, February.
    7. McNeil, Andrew & Lee, Neil & Luca, Davide, 2022. "The long shadow of local decline: birthplace economic conditions, political attitudes, and long-term individual economic outcomes in the UK," LSE Research Online Documents on Economics 113681, London School of Economics and Political Science, LSE Library.
    8. Fusaro, Stefano & Scandurra, Rosario, 2023. "The impact of the European social fund on youth education and employment," Socio-Economic Planning Sciences, Elsevier, vol. 88(C).
    9. Sabine D’Costa & Jose Enrique Garcilazo & Joaquim Oliveira Martins, 2019. "Impact of macro‐structural reforms on the productivity growth of regions: Distance to the frontier matters," Papers in Regional Science, Wiley Blackwell, vol. 98(1), pages 133-166, February.
    10. Saptorshee Kanto Chakraborty & Antoine Mandel, 2024. "Understanding EU regional macroeconomic tipping points using panel threshold technique," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-30, June.
    11. Fabio Mazzola & Pietro Pizzuto, 2020. "Great Recession and club convergence in Europe: A cross‐country, cross‐region panel analysis (2000–2015)," Growth and Change, Wiley Blackwell, vol. 51(2), pages 676-711, June.
    12. Andres Rodriguez-Pose, 2025. "Why size really doesn't matter: From megacity myths to place-sensitive prosperity," Papers in Evolutionary Economic Geography (PEEG) 2539, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2025.
    13. Takeshi Kato & Yasuyuki Kudo & Hiroyuki Mizuno & Yoshinori Hiroi, 2020. "Regional Inequality Simulations Based on Asset Exchange Models with Exchange Range and Local Support Bias," Applied Economics and Finance, Redfame publishing, vol. 7(5), pages 10-23, September.
    14. Chris McDonald & Ana I. Moreno-Monroy & Laura-Sofia Springare, 2019. "Indigenous economic development and well-being in a place-based context," OECD Regional Development Working Papers 2019/01, OECD Publishing.
    15. Takeshi Kato & Yasuyuki Kudo & Hiroyuki Mizuno & Yoshinori Hiroi, 2020. "Regional Inequality Simulations Based on Asset Exchange Models with Exchange Range and Local Support Bias," Papers 2002.09272, arXiv.org, revised Jul 2020.

    More about this item

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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