Trends across the EBRD region show rising within-country inequality and growing population density in large cities and conurbations. Especially in post-communist countries, income growth has been concentrated at the top of the income distribution, in part a legacy of privatisation and price liberalisation in the early transition period. Across the region, wealth is more concentrated among the very rich than it is in comparable economies elsewhere in the world. At the same time, population growth of cities has come at the expense of towns and rural areas; in almost half of EBRD’s CoOs, more than 50 percent of the population now lives in areas with declining population density.
Key advantages accrue in large, thriving cities, leading to high concentrations of national output. Agglomerations in particular generate productivity gains for businesses which benefit from closeness to product and factor markets as well as knowledge spill-overs and network effects. Public services and infrastructure can also be provided more cost effectively in large agglomerations. Workers often locate in large, thriving cities to benefit from higher wages and productivity, as well as a relatively wider choice of leisure activities. These factors explain in part why, across EBRD CoOs, the main metropolitan regions account for a median of 41 percent of national output.
EBRD focuses on regions based on a number of factors reflecting EBRD’s demand-driven approach, alignment with country and sectoral strategies and the suitability of local economic conditions.
For instance, with a focus on the SEMED region where equality gaps are large, a new pilot for Inclusive Regions will address regional disparities in human capital development by increasing local skills and employment opportunities, access to finance and services while improving connectivity to thriving cities. Activities will combine different types of investments with targeted policy advice to national authorities on regional development plans. Digital solutions and smart cities will be explored in this context.
Just Transition projects aim to identify the inequality implications of the green economy transition (through assessments of skills profiles and gaps) and define reskilling opportunities for the affected local workers. Just Transition projects typically introduce high-quality re-training programmes for internal or external re-deployment, in partnership with local education providers; while enhancing client’s participation in dialogues on regional economic development.