In recent decades the dominant view has been that the globe was becoming a “world of cities” –not just any cities, but rather the largest agglomerations in the world. New York, London, Paris, Tokyo, Shanghai or Singapore – to mention but a few – were regarded as places of opportunity, innovation and growth.
Other regions with medium-sized and small cities, towns, and rural areas were almost dismissed out of hand as places lacking economic potential and as feeders of skills and talent for these large agglomerations. In these places, inhabitants were frequently told they had limited opportunities and a bleak future. The solution to their problems was in larger cities. The places where they lived no longer mattered in a more integrated global order.
Changing places and perceptions
Yet the perception of the role of non-metropolitan areas is changing. First, a growing wave of research has demonstrated that the economic contribution of these places is far larger than once thought. It accounts for around two-thirds of European economic dynamism, as reflected by GDP per capita growth. But even more important is the realisation during COVID-19 that agglomeration and physical proximity may matter less for the development of new economic activity.
The pandemic put many talented people on the move and “smaller” places – cities, towns and rural areas – could suddenly attract talent, innovate and contribute to economic growth. They discovered that not only could they perform their tasks as effectively and productively as they had previously done in large agglomerations and “megastar” cities, but they could do so in an often more pleasant environment. An environment where long commutes no longer dominated their lives; where they could find more affordable and better-quality housing; where they could enjoy nature; where achieving a work-life balance was far easier; and where they could lead healthier lives and worry less about crime.
Post-Covid-19 pandemic trends
Suddenly, these less attractive places have become attractive. They are viewed with new eyes as desirable locations to live, work and prosper. However, not all places have the same allure. During the pandemic, Parisians, for example, flocked to buy property in the west of France. Brittany, Normandy or Pays-de-la-Loire became magnets for buyers. In contrast, many parts of eastern France remained virtually untouched and unchanged.
Regional attractiveness, however, does not occur by accident. Some places of outstanding natural beauty or historical and cultural significance will always attract visitors and workers. But most places have to work to become attractive, and many are also recognising that the ability to attract and retain talent is also critical to attracting investment and visitors.
Helping make places attractive has been the main goal of a set of OECD Dialogues on the Future of Regions I recently moderated.
The participants in the dialogues – a top consultant and author (Parag Khanna), a top academic (Richard Florida) and a manager from a private company (Juliette Langlais) – emphasised how it was not only the pandemic that had put people on the move.
Global challenges, such as climate change, demographic pressures, changes in production and consumption patterns, and wars, were driving migration and especially that of the most entrepreneurial and talented people. And this talent was moving in all directions. While it was still gathering in large cities, it was also dispersing across different types of geographies.
People, and particularly young talent, are becoming more mobile and are choosing to live in places where they can optimise personal and professional satisfaction and quality of life. These conditions can be found, as emphasised by Parag Khanna, in many locations, but are likely to evolve over time as factors, such as climate change, make certain geographies more attractive, while others will become less so. Digital nomads, for example, are a growing group of workers capable of performing their jobs anywhere in the world. Such mobile groups will only continue to grow and take advantage of this new-found freedom.
Richard Florida made it clear that big cities will still lure young talent because of the rich work, cultural and social opportunities they provide. Most other cities and regions, however, cannot afford such luxury and will have to work hard to make themselves attractive to talent. Here is where natural and cultural amenities play a fundamental role, as does the availability of affordable housing, adequate service provision, and good connectivity – both digital and physical.
Juliette Langlais underscored the importance of increased mobility, with Airbnb identifying a considerable increase in long-term rentals outside of peak holiday seasons and beyond traditional destinations. This increase was providing a new lease of life and significant opportunities to areas that had, at best, become sleepy towns or rural areas, and, at worst, had experienced long-term decline or stagnation.
A talent toolkit
But how can these opportunities be harnessed? How do local decision-makers and local societies make their place matter? Grasping the opportunities that increased population mobility offers to non-metropolitan areas is not simply a question of luck. Development does not fall like manna from heaven. It requires having the right diagnosis, a clear vision, and putting in place the necessary policies to attract and retain talent.
Communities, in general, and decision-makers, in particular, need to roll up their sleeves and assess where their unique strengths and weaknesses as a region lie. This includes non-work and non-pecuniary factors such as high-speed internet, affordable housing, cultural and social opportunities, and natural capital, all of which contribute to quality of life, and are effective levers for talent attraction and retention.
The OECD report on Rethinking regional attractiveness in the new global environment provides a guide on how to do that. It highlights the near universal challenge faced by regions to attract and retain talent beyond metropolitan centres, and provides a six-step roadmap to help policy makers address coordination gaps, and strategically position regions to attract and retain the talent that is needed, in an evolving global landscape.
Read more on the OECD work on regional attractiveness.
Andrés Rodríguez-Pose is the Princesa de Asturias Chair and a Professor of Economic Geography at the London School of Economics. He is the Director of the Cañada Blanch Centre and has been Head of the Department of Geography and Environment at the LSE. He is also a Visiting Professor at the Centre for Innovation Research, University of Stavanger, Norway. He currently chairs the European Commission’s High-Level Group on the future of Cohesion Policy. He has been President of the Regional Science Association International (RSAI) and served as its Vice-President, as well as Vice-President and Secretary of the European Regional Science Association (ERSA).