REGIOlab, University of Oviedo

(Participants in EXIT: Díaz-Dapena, A.; Fernández-Vázquez, E.; Lasarte-Navamuel, E.; Rubiera-Morollón, F. and Viñuela, A.)

Drivers of economic growth, territorial inequality or poverty are hardly studied at a local-municipal level in Europe. Lack of disaggregated data makes almost impossible to obtain accurate proof of the agglomeration of economic activity (in the cities) and therefore the growing gap between rural and urban areas, between the centre and the periphery of the country or between the core and the fringe of the large metropolitan areas.

These territorial disparities can be properly explained and justified by the so-called New Economic Geography, where size and distance (to size) become key factors of economic prosperity. Thus, while well connected and large areas attract new dynamic firms and workers -and will benefit from a virtuous cycle in terms of productivity-, small and remote areas will find extremely difficult to transform their traditional economic structures and will end up specialized in declining sectors in terms of productivity[1].

The promise of the future arrival of new firm belonging to innovative economic sectors, of new qualified jobs, the promise of a new infrastructure or a new policy that would boost economic growth again is always up in the air in these stagnant growth areas. Many of these promises and expectations are not ever fulfilled, forcing young generations to migrate to other areas and leaving the remaining (aged) population with a perception of having been ‘left behind’ either by their regional or national governments or by the European policies.

In a neoclassical world, this problem should disappear by itself over time but through a socially unpleasant solution: labour force migrating to better places, population decline, less provision of (public) services, lack of opportunities, etc.  The remaining population will live in area with no future and eventually political discontent, the perfect arena for the growth of populist political parties (Rodríguez-Pose, 2018; McCann, 2018)

Where are those areas? What are their characteristics?  What statistical information do we have for these areas?  In the EXIT Project we will collect and econometrically estimate reliable indicators at local level (as opposed to regions) to provide comprehensive socioeconomic information of the left-behind areas for several European countries.

In order to evaluate economic growth (or better said, the lack of it) at local level firstly we would need some proxy of economic activity such as GDP or income.  None of those indicators exist al local level in Europe. This problem could be solved if instead of analysing the territorial concentration of income (economic activity) and its rate of growth we would have some local poverty indicator, so we could analyse the territorial concentration of poverty.  But once again, in Europe there is no data on absolute or relative poverty (such as the AROPE indicator, one of the most relevant ones) beyond the administrative regions.

The AROPE (Population at Risk of Poverty and Exclusion) is a multidimensional indicator which reflects the importance not only of the household´s income (if earning 60% or less income than the national median) but also different aspects of poverty and social exclusion (such as severe deprivation or low work intensity). The AROPE indicator is elaborated by Eurostat at national and regional level but is not available at local level.

Applying a small area estimation process based on Fernandez-Vazquez et al. (2020) and combining the EU-SILC and the Microcensus data (2011 and 2021) for those European countries where its access is possible,  the EXIT Project offers estimated figures of the average household income and the AROPE indicator at municipal level (LAU2 using EU nomenclature). Combined with other relevant indicators under the framework of the EXIT Project, these estimations at local level can show a different perspective on the territorial imbalances.

Let’s take the case of France. While the regions including the city of Paris and Lyon (Figure 1 and 2) traditionally show high levels of income, according to our 2021 estimations we can observe strong disparities within them, i.e. areas with high percentages of population in risk of poverty and social exclusion according to the des-aggregated AROPE estimations share space with the highest levels of income.

Figure 1. AROPE estimations within Paris. 2021.

Figure 2. AROPE estimations within Rodano 2021.

Once available local data is compiled, and 2021 estimations at local level are performed for those European countries suitable for the methodology, the EXIT Project will be able to provide insights over the factors behind territorial imbalances at fine scale, and their plausible connection with the upsurge of political and social discontent in the means of -among others- populist votes, riots or public demonstrations in certain areas.

References

Duraton, G. and Puga, D. (2002) ‘Diversity and Specialization in Cities: Why, Where and When Does it Matter’, in P. McCann (ed.) Industrial Localization Economics, pp. 151-86. Cheltenham: Edward Elgar.

Fernandez-Vazquez, E., Diaz Dapena, A., Rubiera-Morollon, F., Viñuela, A., (2020) Spatial Disaggregation of Social Indicators: An Info-Metrics Approach. Social Indicators Research, 152(2), pp. 809–821.

McCann, P. (2018). The trade, geography and regional implications of Brexit. Papers in Regional Science, 97, pp. 3-8.

Rodríguez-Pose, A. (2018). The revenge of the places that don’t matter (and what to do about it). Cambridge journal of regions, economy and society, 11(1), pp. 189-209.

[1] For a broader understanding of the relevance of agglomeration economies in the growth of territories, see, among others, Duraton, G. and Puga, D. (2002).