Our work on urban systems proposes place-based analysis and policy guidance to help cities of all sizes and their regions to address the multifaceted challenges cities face today, including addressing demographic change, advancing decarbonisation, and fostering social justice.

Productivity and innovation underpin long-term economic growth and competitiveness of regions. They can help regions transition their economic structures and ensure sustainable wage growth for workers. Regions can follow different paths to unlock their potential, pushing the global knowledge frontier in some areas and focusing on uptake and diffusion of innovation in others. With effective governance, innovation policy can be a lever for place-based regional government. To help regions unlock their productivity and innovation potential, understanding the local drivers for productivity growth, the regional innovation system and its bottlenecks and the interplay with policies at different levels of government is key.

Many places in the OECD face declining and ageing populations. This trend will continue. 14 OECD countries are expecting to lose population by 2040. In some regions this trend will be lasting and strong, with some projected to lose 20% or more of their population by 2050. Strong population shrinkage brings challenges that are best addressed at the regional and local level. For example, the costs of services and infrastructure provision rise per person, while quality and access risks declining. Affected regions typically struggle with labour and skill shortages, deteriorating real estate values, eroding tax bases and vacant buildings. The effects vary across regions: while people often migrate from rural to urban regions, some cities and towns are also affected by population decline. Local policies, delivered with national support, are necessary to foster well-being, economic and environmental sustainability. They need to cover government finances, infrastructure and service provision as well as multilevel governance.

Regions, cities, and rural areas are key to addressing global environmental challenges, including climate change. Effective solutions require concerted efforts in areas such as land use, infrastructure, and economic activity transformations. Subnational governments are strategically positioned to spearhead responses, overseeing, on average, 63% of climate-related public expenditure and 69% of climate-related public investment, alongside broader powers over skills, housing, transport, waste, water, energy, and land use.