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The International Dimension of 
(European) Urban Policy- a view 
from the OECD 
Ioannis Kaplanis 
Economist 
Regional Development Policy Division 
Public Governance and Territorial Development Directorate 
Open Days- 12th European Week of Cities and Regions 
Brussels, 9 October 2014
Topics 
1| Urbanisation trends 
2| A new urban paradigm- European and 
international 
3| Governance arrangements matter 
4| Collaboration at the international level
3 
Most people across the OECD live in cities 
13.4% 
25.3% 
27.3% 
28.0% 
28.7% 
29.3% 
29.8% 
30.2% 
35.3% 
36.0% 
36.8% 
37.2% 
37.4% 
37.9% 
38.8% 
39.3% 
39.6% 
40.0% 
40.4% 
40.8% 
44.4% 
47.0% 
48.3% 
48.6% 
50.9% 
53.5% 
56.3% 
68.5% 
73.2% 
83.1% 
24.3% 
22.2% 
25.1% 
11.9% 
21.7% 
17.9% 
25.0% 
20.3% 
20.9% 
18.8% 
32.3% 
36.9% 
15.9% 
17.9% 
25.0% 
16.1% 
15.8% 
9.1% 
25.0% 
33.3% 
14.7% 
10.8% 
24.9% 
18.3% 
11.0% 
15.0% 
16.8% 
9.5% 
13.4% 
16.9% 
62.4% 
52.5% 
47.6% 
60.1% 
49.5% 
52.9% 
45.2% 
49.5% 
43.8% 
45.3% 
30.9% 
26.0% 
46.7% 
44.3% 
36.3% 
44.5% 
44.5% 
50.9% 
34.7% 
25.9% 
40.9% 
42.2% 
26.8% 
33.1% 
38.0% 
31.5% 
26.9% 
21.9% 
13.4% 
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 
Luxembourg (1) 
Slovak Republic (8) 
Norway (6) 
Finland (7) 
Slovenia (2) 
Hungary (10) 
Czech Republic (16) 
Poland (58) 
Italy (74) 
Switzerland (10) 
Denmark (4) 
Spain (76) 
Netherlands (35) 
Sweden (12) 
Ireland (5) 
Germany (109) 
Portugal (13) 
Estonia (3) 
Greece (9) 
France (83) 
United Kingdom (101) 
Belgium (11) 
Austria (6) 
Chile (26) 
OECD (1179) 
Mexico (77) 
United States (262) 
Canada (34) 
Japan (76) 
Korea (45) 
Metropolitan Areas (500,000+) Small/Medium Sized Functional Urban Areas (50,000-500,000) Residents living outside Functional Urban Areas
4 
The rise of the mega-cities 
0 
5 
10 
15 
20 
25 
30 
35 
40 
45 
50 
-7000 -3500 -2500 -2100 -700 200 600 900 1200 1500 1800 1825 1900 1950 2007 2020 2025 
Rio 
London 
Beijing 
NYC 
Sao Paolo 
Mexico City 
Mumbai 
Tokyo 
Delhi 
Uruk 
(40k) 
Mari 
(50k) Ur 
(65k) 
Constantinople 
(600k) 
Baghdad 
(900k) 
Babylon 
(200k) 
Rome 
(1.2M) 
Kaifeng 
(1M) Beijing 
(1M) 
Mega-city = 
10M 
(- = BC) 
Largest cities in the world 7000 BC until 1800 
NYC only mega-city in 1950 
29 mega-cities in 2025 
9 mega-cities in 1985 
21 mega-cities in 2012 
Population (Millions) 
Source: http://geography.about.com/library/weekly/aa011201a.htm, citing Chandler, T. (1987) Four Thousand Years of Urban 
Growth: An Historical Census, Edwin Mellen Press.
0 
0.1 
0.2 
0.3 
0.4 
0.5 
0.6 
0.7 
0.8 
0.9 
1950-1970 1971-1990 1991-2010 2011-2030 2031-2050 
Developed countries 
Developing & emerging 
countries in Asia 
Developing & emerging 
countries in other regions 
5 
Urban population is growing at the fastest 
speed in developing and emerging countries 
Source: UNDESA Population Division (2012), World Urbanization Prospects: The 2011 Revision 
New urban dwellers in absolute numbers (1950-2050) 
Billions
6
7 
Income growth comes with urbanisation; however 
urbanisation doesn’t guarantee it 
Urbanisation rate (%) 
Income 
growth 
40-50% 
Country Group A 
(urbanisation hand-in- 
hand with 
income growth) 
Country Group B 
(intermediate) 
Country Group C 
(urbanisation 
doesn’t bring 
income growth)
The traditional paradigm: 
• Efficiency and growth come first. 
• Pursuit of equity or environmental goals should interfere as little as 
possible with the pursuit of growth. 
• Regional policy as the ‘residual sectoral policy’. 
A new approach: 
• Giving greater weight to complementarities (not just tensions) between 
efficiency, equity and environmental objectives. 
• Complementarities between these three dimensions of progress are 
most visible and most effectively managed in particular places. 
• Not one size fits all- but place based policies 
• Urban/regional policy is not simply another line of policy running in 
parallel to sectoral policies: it is about co-ordinating and optimising the 
mix of sectoral policies where they interact – in specific places. 8 
Reconciling efficiency, equity and 
environmental sustainability
9 
Sustainability must be pursued in all 
its three dimensions 
Identifying and promoting links between economic, 
environmental and social goals is both possible and 
critical to building cities/regions that work 
Efficiency Equity Environmental 
sustainability 
Economic 
policies 
Sustained 
growth 
Economic reforms 
may increase equity 
Green growth 
policies can improve 
sustainability 
Social policies 
Social cohesion can 
increase efficiency 
(e.g., trust, security, 
knowledge) 
Social 
cohesion 
Inequality can be 
reduced without 
environmental harm 
(e.g., replace fuel 
subsidies with 
transfers) 
Environmental 
policies 
Green growth 
policies can boost 
innovation and 
efficient resource use 
Environmental 
degradation tends to 
hit disadvantaged 
groups more 
Environmental 
sustainability 
Sustainable development requires a search for policy complementarities
Role of Subnational Governments by types of 
expenditures 
26% 
18% 
14% 14% 
12% 
16% 
20% 
13% 
12% 
16% 
20% 
18% 
0% 
5% 
10% 
15% 
20% 
25% 
30% 
Education Health Economic 
Affairs 
General 
Services 
Social 
protection 
Other* 
OECD (27 countries) EU27 
OECD and EU (2011, % of expenditure) 
*Other: Defence; Public order and safety; Housing and community amenities; Recreation, culture and religion; Environment.
Urban/regional policy should focus 
more on coordination failures 
& Governance 
11
• Recent OECD analyses suggest that governance 
fragmentation can more than offset the economic benefits 
of agglomeration. 
• Local and regional policies can do more to reduce 
agglomeration costs (congestion, pollution, etc) than to 
enhance agglomeration benefits. 
• Findings on polycentrism point to the potential benefits of 
systems of cities: connectivity matters. 
• Agglomeration is not a synonym for density. 
12 
Agglomeration and governance
13 
Agglomeration benefits are real 
Productivity increases with city size. 
Source: OECD Metropolitan Database.
14 
Agglomeration in support of 
territorial cohesion? 
Economic growth increases with proximity to large cities 
Yearly growth rates of GDP per capita in TL3 regions (1995-2010) and driving time to the closest large 
metropolitan area of 2m or more inhabitants 
0.6 
0.8 
1.0 
1.2 
1.4 
1.6 
1.8 
2.0 
within 45 min. 
by car 
45 to 90 min. 
by car 
90 to 180 min. 
by car 
180 to 300 min. 
by car 
more than 300 
min. by car 
Note: Yearly growth rates controlling for country fixed effects and initial GDP. Eighteen OECD countries included. 
Source: Ahrend, R and A. Schumann (OECD, 2014)
15 
Less fragmented urban governance 
promotes growth
• Urban sprawl creates 
negative externalities in 
Metropolitan areas (MAs) 
• Cooperation is a way to 
internalize the externalities 
when making policy 
decisions 
Governance bodies reduce the cost of 
administrative fragmentation 
Difference significant at the 99%-level after 
controlling for log-population levels and 
country specific trends. 
-0.8 
-0.6 
-0.4 
-0.2 
0 
0.2 
0.4 
0.6 
0.8 
1 
1.2 
1.4 
With Governance 
Body 
Without Governance 
Body 
Change in Urban Sprawl 
Based on OECD Metro 
Governance Survey
Governance bodies increase well-being 
55% 
60% 
65% 
70% 
75% 
80% 
With Transport 
Authorities 
Without Transport 
Authorities 
Share of Citizens Satisfied with Public 
• Public Transport Transport 
projects usually cut 
through many 
jurisdictions 
• Cooperation is 
required for effective 
implementation and 
coordination of 
services 
• Citizens are more 
satisfied in MAs 
that have sectoral 
authorities for 
public transport 
Based on European Urban Audit perception survey. 
Difference significant at 95% level.
• Invest using an integrated strategy tailored to different places 
• Adopt effective co-ordination instruments across levels of govt 
• Co-ordinate across SNGs to invest at the relevant scale 
Pillar 1 
Co-ordinate across 
levels of governments 
and policies 
• Assess upfront long term impacts and risks 
• Encourage stakeholder involvement throughout investment cycle 
• Mobilise private actors and financing institutions to diversify sources 
of funding and strengthen capacities 
• Reinforce the expertise of public officials & institutions 
• Focus on results and promote learning from experience 
Pillar 2 
Strengthen capacities 
and promote policy 
learning at all levels of 
government 
• Develop a fiscal framework adapted to the objectives pursued 
• Require sound and transparent financial management at all levels 
• Promote transparency and strategic use of procurement 
• Strive for quality and consistency in regulatory systems across 
levels of government 
Pillar 3 
Ensure proper framework 
conditions for public 
investment at all levels of 
government 
18 
An OECD instrument: The Principles for Effective Public 
Investment Across Levels of Government 
- The first OECD Instrument in the area of regional policy and where 
sub-national governments are explicitly recognised
• OECD “Urban trends and governance” project financed by DG 
Regio (agglomeration, governance, connectivity, etc) 
• FUAs: new definition of cities by OECD and EU based on 
functional economic criteria than administrative boundaries 
• Collaboration of OECD with Eurostat on Regional & Metropolitan 
Area Databases 
• Support by EU for OECD research on international experiences of 
urbanisation (e.g. National Urban Policy Review of China) 
• Convergence of views between the CoR and the OECD on multi-level 
governance approaches and further collaboration on 
implementation 
19 
Collaboration of OECD and EU institutions 
on urban policy
20 
The OECD Metropolitan Database 
Interactive maps and data: 
For metro areas: http://measuringurban.oecd.org/ 
For regions: http://stats.oecd.org/OECDregionalstatistics/
http://www.oecd.org/gov/regional-policy/how-is-life-in-your-region.htm 21
• Growing numbers of people will reside in cities in the future- mainly 
from emerging/developing countries 
• Urbanisation path matters, since durability in time; can affect prospects 
of global economy 
• New urban paradigm; smart, sustainable and inclusive growth 
• Agglomeration benefits are real; but connectivity/polycentricity matter 
• Fragmented governance can adversely affect urban performance 
• Need to: 
• Make best use of city specific assets 
• Utilise policy complementarities at the local level; Functional Urban 
Area level 
• Co-ordinate across jurisdictional lines and across levels of government 
• In search of a balanced, sustainable and inclusive urban growth model; 
what next? 
22 
Concluding remarks
Thank you for your attention! 
ioannis.kaplanis@oecd.org

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The international-dimension-of-european-urban-policy

  • 1. The International Dimension of (European) Urban Policy- a view from the OECD Ioannis Kaplanis Economist Regional Development Policy Division Public Governance and Territorial Development Directorate Open Days- 12th European Week of Cities and Regions Brussels, 9 October 2014
  • 2. Topics 1| Urbanisation trends 2| A new urban paradigm- European and international 3| Governance arrangements matter 4| Collaboration at the international level
  • 3. 3 Most people across the OECD live in cities 13.4% 25.3% 27.3% 28.0% 28.7% 29.3% 29.8% 30.2% 35.3% 36.0% 36.8% 37.2% 37.4% 37.9% 38.8% 39.3% 39.6% 40.0% 40.4% 40.8% 44.4% 47.0% 48.3% 48.6% 50.9% 53.5% 56.3% 68.5% 73.2% 83.1% 24.3% 22.2% 25.1% 11.9% 21.7% 17.9% 25.0% 20.3% 20.9% 18.8% 32.3% 36.9% 15.9% 17.9% 25.0% 16.1% 15.8% 9.1% 25.0% 33.3% 14.7% 10.8% 24.9% 18.3% 11.0% 15.0% 16.8% 9.5% 13.4% 16.9% 62.4% 52.5% 47.6% 60.1% 49.5% 52.9% 45.2% 49.5% 43.8% 45.3% 30.9% 26.0% 46.7% 44.3% 36.3% 44.5% 44.5% 50.9% 34.7% 25.9% 40.9% 42.2% 26.8% 33.1% 38.0% 31.5% 26.9% 21.9% 13.4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Luxembourg (1) Slovak Republic (8) Norway (6) Finland (7) Slovenia (2) Hungary (10) Czech Republic (16) Poland (58) Italy (74) Switzerland (10) Denmark (4) Spain (76) Netherlands (35) Sweden (12) Ireland (5) Germany (109) Portugal (13) Estonia (3) Greece (9) France (83) United Kingdom (101) Belgium (11) Austria (6) Chile (26) OECD (1179) Mexico (77) United States (262) Canada (34) Japan (76) Korea (45) Metropolitan Areas (500,000+) Small/Medium Sized Functional Urban Areas (50,000-500,000) Residents living outside Functional Urban Areas
  • 4. 4 The rise of the mega-cities 0 5 10 15 20 25 30 35 40 45 50 -7000 -3500 -2500 -2100 -700 200 600 900 1200 1500 1800 1825 1900 1950 2007 2020 2025 Rio London Beijing NYC Sao Paolo Mexico City Mumbai Tokyo Delhi Uruk (40k) Mari (50k) Ur (65k) Constantinople (600k) Baghdad (900k) Babylon (200k) Rome (1.2M) Kaifeng (1M) Beijing (1M) Mega-city = 10M (- = BC) Largest cities in the world 7000 BC until 1800 NYC only mega-city in 1950 29 mega-cities in 2025 9 mega-cities in 1985 21 mega-cities in 2012 Population (Millions) Source: http://geography.about.com/library/weekly/aa011201a.htm, citing Chandler, T. (1987) Four Thousand Years of Urban Growth: An Historical Census, Edwin Mellen Press.
  • 5. 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1950-1970 1971-1990 1991-2010 2011-2030 2031-2050 Developed countries Developing & emerging countries in Asia Developing & emerging countries in other regions 5 Urban population is growing at the fastest speed in developing and emerging countries Source: UNDESA Population Division (2012), World Urbanization Prospects: The 2011 Revision New urban dwellers in absolute numbers (1950-2050) Billions
  • 6. 6
  • 7. 7 Income growth comes with urbanisation; however urbanisation doesn’t guarantee it Urbanisation rate (%) Income growth 40-50% Country Group A (urbanisation hand-in- hand with income growth) Country Group B (intermediate) Country Group C (urbanisation doesn’t bring income growth)
  • 8. The traditional paradigm: • Efficiency and growth come first. • Pursuit of equity or environmental goals should interfere as little as possible with the pursuit of growth. • Regional policy as the ‘residual sectoral policy’. A new approach: • Giving greater weight to complementarities (not just tensions) between efficiency, equity and environmental objectives. • Complementarities between these three dimensions of progress are most visible and most effectively managed in particular places. • Not one size fits all- but place based policies • Urban/regional policy is not simply another line of policy running in parallel to sectoral policies: it is about co-ordinating and optimising the mix of sectoral policies where they interact – in specific places. 8 Reconciling efficiency, equity and environmental sustainability
  • 9. 9 Sustainability must be pursued in all its three dimensions Identifying and promoting links between economic, environmental and social goals is both possible and critical to building cities/regions that work Efficiency Equity Environmental sustainability Economic policies Sustained growth Economic reforms may increase equity Green growth policies can improve sustainability Social policies Social cohesion can increase efficiency (e.g., trust, security, knowledge) Social cohesion Inequality can be reduced without environmental harm (e.g., replace fuel subsidies with transfers) Environmental policies Green growth policies can boost innovation and efficient resource use Environmental degradation tends to hit disadvantaged groups more Environmental sustainability Sustainable development requires a search for policy complementarities
  • 10. Role of Subnational Governments by types of expenditures 26% 18% 14% 14% 12% 16% 20% 13% 12% 16% 20% 18% 0% 5% 10% 15% 20% 25% 30% Education Health Economic Affairs General Services Social protection Other* OECD (27 countries) EU27 OECD and EU (2011, % of expenditure) *Other: Defence; Public order and safety; Housing and community amenities; Recreation, culture and religion; Environment.
  • 11. Urban/regional policy should focus more on coordination failures & Governance 11
  • 12. • Recent OECD analyses suggest that governance fragmentation can more than offset the economic benefits of agglomeration. • Local and regional policies can do more to reduce agglomeration costs (congestion, pollution, etc) than to enhance agglomeration benefits. • Findings on polycentrism point to the potential benefits of systems of cities: connectivity matters. • Agglomeration is not a synonym for density. 12 Agglomeration and governance
  • 13. 13 Agglomeration benefits are real Productivity increases with city size. Source: OECD Metropolitan Database.
  • 14. 14 Agglomeration in support of territorial cohesion? Economic growth increases with proximity to large cities Yearly growth rates of GDP per capita in TL3 regions (1995-2010) and driving time to the closest large metropolitan area of 2m or more inhabitants 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 within 45 min. by car 45 to 90 min. by car 90 to 180 min. by car 180 to 300 min. by car more than 300 min. by car Note: Yearly growth rates controlling for country fixed effects and initial GDP. Eighteen OECD countries included. Source: Ahrend, R and A. Schumann (OECD, 2014)
  • 15. 15 Less fragmented urban governance promotes growth
  • 16. • Urban sprawl creates negative externalities in Metropolitan areas (MAs) • Cooperation is a way to internalize the externalities when making policy decisions Governance bodies reduce the cost of administrative fragmentation Difference significant at the 99%-level after controlling for log-population levels and country specific trends. -0.8 -0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1 1.2 1.4 With Governance Body Without Governance Body Change in Urban Sprawl Based on OECD Metro Governance Survey
  • 17. Governance bodies increase well-being 55% 60% 65% 70% 75% 80% With Transport Authorities Without Transport Authorities Share of Citizens Satisfied with Public • Public Transport Transport projects usually cut through many jurisdictions • Cooperation is required for effective implementation and coordination of services • Citizens are more satisfied in MAs that have sectoral authorities for public transport Based on European Urban Audit perception survey. Difference significant at 95% level.
  • 18. • Invest using an integrated strategy tailored to different places • Adopt effective co-ordination instruments across levels of govt • Co-ordinate across SNGs to invest at the relevant scale Pillar 1 Co-ordinate across levels of governments and policies • Assess upfront long term impacts and risks • Encourage stakeholder involvement throughout investment cycle • Mobilise private actors and financing institutions to diversify sources of funding and strengthen capacities • Reinforce the expertise of public officials & institutions • Focus on results and promote learning from experience Pillar 2 Strengthen capacities and promote policy learning at all levels of government • Develop a fiscal framework adapted to the objectives pursued • Require sound and transparent financial management at all levels • Promote transparency and strategic use of procurement • Strive for quality and consistency in regulatory systems across levels of government Pillar 3 Ensure proper framework conditions for public investment at all levels of government 18 An OECD instrument: The Principles for Effective Public Investment Across Levels of Government - The first OECD Instrument in the area of regional policy and where sub-national governments are explicitly recognised
  • 19. • OECD “Urban trends and governance” project financed by DG Regio (agglomeration, governance, connectivity, etc) • FUAs: new definition of cities by OECD and EU based on functional economic criteria than administrative boundaries • Collaboration of OECD with Eurostat on Regional & Metropolitan Area Databases • Support by EU for OECD research on international experiences of urbanisation (e.g. National Urban Policy Review of China) • Convergence of views between the CoR and the OECD on multi-level governance approaches and further collaboration on implementation 19 Collaboration of OECD and EU institutions on urban policy
  • 20. 20 The OECD Metropolitan Database Interactive maps and data: For metro areas: http://measuringurban.oecd.org/ For regions: http://stats.oecd.org/OECDregionalstatistics/
  • 22. • Growing numbers of people will reside in cities in the future- mainly from emerging/developing countries • Urbanisation path matters, since durability in time; can affect prospects of global economy • New urban paradigm; smart, sustainable and inclusive growth • Agglomeration benefits are real; but connectivity/polycentricity matter • Fragmented governance can adversely affect urban performance • Need to: • Make best use of city specific assets • Utilise policy complementarities at the local level; Functional Urban Area level • Co-ordinate across jurisdictional lines and across levels of government • In search of a balanced, sustainable and inclusive urban growth model; what next? 22 Concluding remarks
  • 23. Thank you for your attention! ioannis.kaplanis@oecd.org