Enrique Garcilazo

The Economic Performance of European Cities and City Regions: Myths and Realities

The ever-increasing concentration of people and economic growth in the largest cities relative to the rest of the country has slowed down or even reversed in many of the developed European countries over the last decade. This trend contradicts what the global cities, urban economics and new economic geography literature would predict. This trend can be interpreted from two points of view: (1) the trend is due to large obstacles to further large city urbanization and thus is inefficient or (2) this trend highlights alternative pathways to growth than the mega-city approach and may be as, if not more, efficient. This trend may be linked to Europes uniquely polycentric urban structure with high number of small- and medium-sized cities. In addition, improvements in the access to services, including broadband, outside large cities may have facilitated the higher growth rates of smaller centres and rural regions and increased their appeal for residents and firms. Last but not least, negative externalities in the large cities, such as congestion costs, pollution, labour crowding and high cost of living, may increase the appeal of smaller centres and rural regions.

Quality of Government and the Returns of Investment: Examining the Impact of Cohesion Expenditure in European Regions

Rodríguez-Pose A. and Garcilazo E. Quality of government and the returns of investment: examining the impact of cohesion expenditure in European regions, Regional Studies. This paper sets out to examine the relationship between the quality of local and regional governments and regional economic performance, linking government quality to the returns of European Union Structural and Cohesion Funds. Using primary data on government quality collected by the Quality of Government Institute, combined with World Bank Global Governance Indicators data, a two-way fixed effect panel regression model is conducted for a total of 169 European regions during the period 1996–2007. The results of the analysis underline the importance of government quality both as a direct determinant of economic growth as well as a moderator of the efficiency of Structural and Cohesion Funds expenditure. The analysis finds that both European Union investments targeting regions and quality of government simultaneously make a difference for regional economic growth, but that above a threshold of cohesion expenditure – calculated at more than €120 of cohesion expenditure per capita per year – government quality improvements are a far more important and realistic option for regional development than additional public investment. In many of the regions receiving the bulk of Structural Funds, further improvements in economic growth would require massive amounts of additional investment, unless the quality of government is significantly enhanced.

The evolution of place-based policies and the resurgence of geography in the process of economic development

This note provides a short description of the recent resurgence of geography and space in the process of economic development, and it also describes a paradigm shift in regional (place-based) policies taking place in OECD countries. Finally the note summarizes recent trends in regional growth dynamics, their links to aggregateperformance andwhat thismeans for policy. The policy discussion summarizes key messages in our first OECD Regional Outlook to be released this year. Although this paper deals with the OECD area as a whole, its conclusions are clearly applicable to the conduct of regional policy in the EU, particularly in the current context of financial crisis which places a renewed premium on the design of effective and appropriately targeted policies for regional development. The views and opinions expressed here reflect solely those of the author.

The Contribution of Regions to Aggregate Growth in the OECD

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.

Patterns and Trends in Services Related Activities in OECD Regions

This paper examines the spatial patterns in service sector activities and links them to the overall trends in the service sector among OECD countries. We find that services have a strong spatial dimension linked to non-tradable activities which depend on local conditions. In particular we observe a decrease in the geographic concentration of service sector activities among all OECD regions but an increase in concentration among regions within countries making service sector activities more heterogeneous in space over time. Financial and business services are particularly concentrated amongst service subsectors. Specialisation in financial and business services appears to be higher in capital regions or regions with large cities, and have particularly increased among OECD regions. Within countries, regions have specialised more in public administration and in social services. This latter trend is important given that productivity in public administration and social services and in wholesale and retail trade has a strong growth potential due to forces of convergence.