Regional inequalities and contributions to aggregate growth in the 2000s: an EU vs US comparison based on functional regions

Abstract

\n This paper offers a comparative analysis of regions in the United States (US) and European Union (EU) countries before and during the aftermath of the global financial crisis. By using a regional taxonomy approaching a functional definition, we can compare in a more meaningful way the regions in EU countries and the US. We use of a newly developed OECD functional typology of TL3 (Territorial Level 3) regions, which classifies regions into five categories: two are metropolitan regions (with a very large or large city) and three are regions with accessibility to cities of different sizes. Over the period 2000–17, we assess which types of regions have been most resilient or vulnerable to the effects of the crisis. To identify structural factors, we analyse the evolution of the contributions of regions to aggregate GDP and productivity growth. Some structural patterns emerge, which are then related to the evolution of regional inequalities between 2000 and 2017. Overall, we found that regional inequalities seem mainly related to structural factors rather than macroeconomic shocks, such as the global financial crisis.