{"id":31658,"title":"Mind the Gap \u2013 The Twin Transition Threatens to Increase the Urban-Rural Divide in the EU","link":"https:\/\/bst-europe.eu\/de\/investment-budget\/mind-the-gap-the-twin-transition-threatens-to-increase-the-urban-rural-divide-in-the-eu\/","date":"29. November 2022","date_unix":1669739195,"date_modified_unix":1754481223,"date_iso":"2022-11-29T16:26:35+00:00","content":"

In a recent study<\/a>, we together with the Vienna Institute for International Economic Studies<\/a> <\/i><\/span><\/span> assess the readiness of regions to manage the green and digital transition. <\/span><\/i><\/span>The results show a clear pattern favouring urban and metropolitan regions specialised in knowledge-intensive and high-tech sectors to the disadvantage of rural and remote regions specialised in agriculture and low-technology. These results are all the more discomforting from a cohesion perspective because of already existing disparities between regions with different economic profiles.<\/em><\/i><\/p>\n

Sectoral specialization patterns divide urban and rural regions in the EU<\/h2>\n

Regions in Europe have taken different paths of economic development, and despite EU efforts to reduce disparities, economic specialisation \u2013 and in particular sectoral specialisation \u2013 remains a major determinant of prosperity and economic potential.<\/p>\n

The sectoral specialisation describes the technological base of a region\u2019s dominant economic segments, and it depends on a variety of the region\u2019s individual characteristics. These characteristics can be either inherent to regions, like geographic conditions or the availability of raw materials. Or they are historical and path-dependent, such as investment, demography, innovation or productivity.<\/p>\n

The combinations of these individual characteristics have led to a variety of complex specialisation outcomes in regions. However, there is a general regional specialisation divide in Europe that can be broadly classified as a dichotomy between urban and metropolitan areas on the one side and remote and rural regions on the other.<\/p>\n

Urban and metropolitan regions are more likely to be specialised in high-technology and knowledge-intensive services with high productivity, such as internet and communication technologies, complex engineering or electronics. In contrast, remote and rural regions tend to specialise in sectors of low-technology or in agriculture, which include textile manufacturing, food production, fishing or forestry.<\/p>\n

These uneven settings of regional specialization have contributed to the agglomerations of capital and employment in urban regions to the detriment of rural ones. A process that has strong implications for the distribution of regional well-being.<\/p>\n

Urban innovation centres outperform agricultural and remote regions<\/h2>\n

With its freedom of movement and removal of trade barriers<\/a>, the EU single market enables a concentration of highly skilled labour in regions with the best employment opportunities. Similarly, as innovative firms concentrate in urban areas, rural regions are confronted with a lack of productive capital and investment, as well as generally low levels of business sophistication. This clustering of capital, innovative firms and high-skilled employment in urban and metropolitan regions has given rise to a significant productivity divide that is reinforcing territorial prosperity gaps.<\/p>\n

Therefore, uneven specialisation patterns translate into large income disparities between European regions (figure 1). Of all European regions with a GDP per capita income of above \u20ac32,000, most are specialised in either knowledge-intensive services or high-technology. And what stands out is that most are metropolitan regions \u2013 with capital regions being particularly successful.<\/p>\n

There are only a few regions that are rural and specialised in agriculture or low-tech manufacturing that can display similar income levels. Now, against the backdrop of the digital and green transition, this urban-rural divide is likely to even increase.<\/p>\n

Figure 1: Economic prosperity and sectoral specialisation<\/strong><\/p>\n

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