What are the key growth factors? The theory

This chapter investigates how less-developed regions can catch up to national average GDP per capita. It focuses on identifying and analysing the main factors responsible for growth - and the main bottlenecks - for regions at different levels of development. It bases the analysis on five factors for growth: infrastructure, human capital, labour market, innovation, agglomeration and connectivity, and productivity. A first key finding of this analysis is that growth tends to follow simultaneous gains in several areas, such as human capital, infrastructure and innovation, rather than just one of these factors being responsible. This emphasises the importance of a multidimensional policy approach and the benefits of enhancing areas of complementarity, rather than tackling individual sectors in isolation. A second key message is that human capital is very important for boosting regional growth in all types of regions. And finally, growth dynamics vary with levels of development they are not the same for underdeveloped regions as for advanced regions.