Pulling together or drifting apart? Regions in the recovery

The recovery from the COVID-19 crisis has been faster than expected – global GDP is already above its pre-pandemic level, and at the time of writing almost half the world’s population have been vaccinated.

It would be understandable therefore to think we are returning to business as usual. However, the reality is anything but. The impacts of the pandemic and the scars it has left have been felt unevenly among people, places and firms. And they are likely to shape our economies and societies for decades to come.

Regional divides in vaccination

Although vaccination campaigns have made significant progress, aggregate figures mask significant disparities across and within countries.

For every 100 people, 16 more people are vaccinated in the most-vaccinated region than in the least-vaccinated region (from a sample of 15 OECD countries from the OECD Regional Recovery Platform). Vaccination gaps are even higher in some countries, such as Belgium, the Czech Republic, Germany and the United States.

Divides are also large between metropolitan and rural areas in some countries. In the United States for instance, there has been a relatively persistent gap in vaccination rates. Indeed, as of September, 42% of the rural population was fully vaccinated, compared to 54% in metropolitan counties.

There are a number of factors at play here. In some cases, it reflects broader difficulties in accessing health services, especially in remote or deprived urban areas. In other cases, it reflects vaccine hesitancy, often associated with limited trust in government and health authorities. Regional divides in trust in government can be striking in some countries, such as Colombia, Mexico, the United States and Turkey, with regional differences of more than 30 percentage points.

Building regional resilience during the recovery

The COVID-19 pandemic puts a magnifying glass on long-term structural weaknesses among regions, weaknesses that have seen no convergence between remote regions and metropolitan regions since the 2008 global financial crisis.

And despite COVID-19 initially being perceived as a great-leveller, it is now clear that many places, such as those with poor access to healthcare and digital infrastructure, crowded housing, and a limited ability to telework, have been put at greater social and economic risk because of those weaknesses. Since 2000, hospital beds per 1,000 inhabitants in remote OECD regions have fallen by 22% on average, much higher than in other areas, and there remains a 50-percentage-point digital divide in fixed broadband download speeds between cities and rural areas. Addressing these gaps was important before the crisis. It must be a priority now.

Inaction is likely to lead to an uneven recovery across regions that could undermine the broader economic recovery. It could also fuel geographies of discontent, putting further pressure on social cohesion and the stability of democratic systems.

Another way

There is another way. Over the last few decades, the OECD has been developing policies that can boost prospects for all types of region – rural and urban. That experience tells us that crises are often opportunities to address long-standing challenges. And the unprecedented recovery packages that countries are putting in place today, as a response to the current crisis, is testament to the size of the opportunity before us.  We can make the most of these opportunities if governments:

• Increase the use of placed-base policies and place-based investment to help address and adapt to mega-trends, bridge digital divides and support the transition to net zero emissions. Subnational governments have a critical role to play here. More than two-thirds of public investment dedicated to climate and environment is undertaken by subnational governments in the OECD. But in order to leverage this potential we need learn from the past, such as in the wake of the 2008 crisis, when abrupt reductions in fiscal support weighed down on subnational government investment for almost a decade. 

• Support more balanced regional development across urban and rural areas. The increase in remote working could be a game-changer, providing an opportunity for more balanced regional development – even if a large exodus from cities is not envisaged. It also provides an opportunity for a better functioning of cities.

• Enhance access to public services in remote and low-density areas. Public services are playing a key role in attracting and retaining skilled workers and firms and generating trust in government. Demographic change will tighten the trade-off between costs of and access to education in rural areas. This calls for innovative solutions of public service delivery, through inter-municipal co-operation, mutualisation and digital public services in remote regions.

• Prioritise digital skills and infrastructure. Closing the digital gap across regions, supporting the uptake of digital tools and investing in skills will be critical in improving prospects especially in remote and rural areas.

• Boost capacity and communication in local and regional governments. Managing the impact of mega-trends and crises and (re)building trust with communities that have been disengaged will require stronger capabilities and effective communication, including to combat dis- and mis-information. Local and regional governments are critical here, given their close links to citizens.

Better understanding the COVID-19 recovery in regions

The OECD is continuing to help policymakers on all fronts. To further help in that process, we’re launching a new OECD Regional Recovery Platform (to  complement the OECD COVID-19 Recovery Dashboard) that will help national and subnational governments track the recovery using internationally comparable subnational data, and support the development of policies to build back better and ultimately bring regions together.

References

• OECD (20210 Enhancing public trust in COVID-19 vaccination: The role of governments Enhancing public trust in COVID-19 vaccination: The role of governments (oecd.org)
• Monroy, Ana Moreno (2021) Counting The Cost: Maintaining Access To Education And Health Services In Rural Areas
• OECD (2021), Implications of Remote Working Adoption on Place Based Policies, https://www.oecd.org/cfe/implications-of-remote-working-adoption-on-place-based-policies-b12f6b85-en.htm
• OECD (2021), The territorial impact of COVID-19: Managing the crisis and recovery across levels of government, https://www.oecd.org/coronavirus/policy-responses/the-territorial-impact-of-covid-19-managing-the-crisis-and-recovery-across-levels-of-government-a2c6abaf/
• Florida, Richard (2021), The Geography of Vaccines,  https://www.bloomberg.com/news/articles/2021-10-04/local-vaccine-rates-mirror-class-and-density-divides?srnd=citylab
• Murphy, Tim; Marema, Tim, (2021), Rate of New Vaccinations Falls by 20%, https://dailyyonder.com/rate-of-new-vaccinations-falls-by-20/2021/10/04/, published in the Daily Yonder (Data sourced from CDC and state departments of health (HI, MA, TX))

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