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The Contribution of Regions to Aggregate Growth in the OECD

Author

Listed:
  • Enrique Garcilazo

    (OECD)

  • Joaquim Oliveira Martins

    (OECD)

Abstract

This paper investigates the contribution of regions to aggregate growth in the OECD. We find a great degree of heterogeneity in the performance of OECD TL3 regions and among the OECD regional typology (urban, intermediate and rural). While the distribution in GDP and GDP per capita growth rates follows an approximately normal distribution, 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. Nevertheless, because the number of these smaller regions is very large and the decay of their contribution to growth is slow (generating a fat tail distribution), their cumulated contribution is actually around 2/3 of aggregate growth. For the period 1995-2007, only 2.4% of OECD TL3 regions contribute to 27% of OECD GDP growth, but the remaining 97.6% corresponds to 73%. We also found that the distribution of growth rates by size follows a non-monotonic pattern, with the largest concentration of above average regional growth rates being concentrated for middle-sized regions. This heterogeneity suggests that the possibilities for growth seem to exist in many different types of regions.

Suggested Citation

  • Enrique Garcilazo & Joaquim Oliveira Martins, 2013. "The Contribution of Regions to Aggregate Growth in the OECD," OECD Regional Development Working Papers 2013/28, OECD Publishing.
  • Handle: RePEc:oec:govaab:2013/28-en
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    File URL: http://dx.doi.org/10.1787/5k3tt0zzp932-en
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    References listed on IDEAS

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    Cited by:

    1. Sabine D’Costa & Enrique Garcilazo & Joaquim Oliveira Martins, 2017. "Impact of macro-structural reforms on the productivity growth of regions: distance to the frontier matters," Working Papers 86, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    2. 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, Spatial Economics Research Centre, LSE.

    More about this item

    Keywords

    metrology;

    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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