Reviving Forgotten Areas Through Smart and Inclusive Neighbourhood Investment

In many cities across the developed world, prosperity and hardship sit side by side. One neighbourhood may have thriving businesses and high-performing schools, while the next struggles with unemployment, poor housing and limited services. A major new OECD study argues that this divide is not random. Where a person grows up still plays a powerful role in shaping their chances in life.

Produced by the OECD Local Economic and Employment Development Programme within its Centre for Entrepreneurship, SMEs, Regions and Cities, and supported by the United Kingdom's Economic and Social Research Council under UK Research and Innovation, the report examines more than 40 neighbourhood-focused programmes across 18 countries. Its message is clear: governments are increasingly turning to place-based strategies to help communities that feel left behind.

These programmes, known as area-based initiatives or ABIs, are designed to tackle problems at the neighbourhood level rather than through one-size-fits-all national policies. They recognise that disadvantage often clusters in specific areas, where unemployment, low educational outcomes and poor health reinforce one another.

What Are Area-Based Initiatives?

Area-based initiatives are government-led programmes that focus on specific neighbourhoods identified as disadvantaged. Instead of dealing with housing, jobs or education separately, they bring these efforts together in one coordinated plan.

Some of these initiatives are large national programmes covering hundreds of neighbourhoods. Others are smaller schemes run by cities or regions. Many have been operating for more than a decade, showing that neighbourhood regeneration has moved beyond short-term experiments to become a serious policy tool.

At the heart of these initiatives is a simple idea: local problems need local solutions. National governments usually provide funding and set overall goals, but local organisations play a key role in delivering services and engaging residents. These local "backbone" organisations help build trust, coordinate partners and make sure plans reflect community needs.

Jobs and Opportunity at the Doorstep

One major focus of these programmes is employment. In many disadvantaged neighbourhoods, residents face multiple barriers to work, including a lack of training, childcare challenges, poor transport links and limited professional networks.

To address this, many initiatives set up local employment offices directly in the neighbourhood. These offer training courses, language classes, digital skills support, career advice and help with job applications. For people who have been unemployed for a long time, personalised one-to-one support can make a big difference.

Young people are a particular priority. Programmes often include mentoring schemes, links with local employers and school-to-work pathways. Some start early, helping children broaden their aspirations before they disengage from education. In certain neighbourhoods, even regeneration projects double as training opportunities, giving young people practical skills while improving local spaces.

Some governments also try to attract businesses into disadvantaged areas using tax incentives or hiring bonuses. However, the evidence shows mixed results. Jobs do not always go to residents, and businesses may relocate without creating long-term benefits. The report suggests that financial incentives work best when combined with strong local training and employer partnerships.

Building Stronger Communities

Area-based initiatives do not focus on jobs alone. They also invest in education, health and social cohesion.

Many programmes take a life-course approach, recognising that early childhood is critical. Expanding access to childcare and preschool can help children develop important skills and allow parents to enter the workforce. Schools in targeted neighbourhoods often receive extra support, including smaller classes, extracurricular activities and cultural programmes.

Outside school, youth clubs, sports programmes and leadership initiatives provide safe spaces and build confidence. These activities can help young people develop skills, friendships and a sense of belonging.

Health is approached in a broader way, too. Rather than focusing only on medical treatment, many initiatives address the social causes of poor health. This can include improving housing conditions, creating green spaces, promoting healthy eating and designing community health centres that are easy to access and trusted by residents.

Social cohesion is another key goal. Investments in community centres, parks and shared public spaces encourage people to meet, interact and build stronger neighbourhood ties.

Transforming Places Without Pushing People Out

Physical regeneration is often the most visible part of neighbourhood renewal. This includes renovating old housing, building affordable homes, upgrading public spaces and improving safety. Increasingly, environmental improvements such as energy-efficient buildings and greener streets are also part of the plan.

But regeneration brings risks. As neighbourhoods improve, property values may rise, potentially pushing out long-term residents. The report highlights the importance of protecting affordable housing and ensuring that existing communities benefit from change rather than being displaced by it.

The OECD's overall conclusion is cautious but hopeful. Area-based initiatives cannot solve structural inequality on their own. National economic and social policies remain crucial. However, when well designed and properly funded, neighbourhood-level programmes can reconnect people to opportunity, rebuild trust and restore pride in places that have long felt overlooked.

In a world where many communities feel left behind, focusing on neighbourhoods may be one of the most practical ways to close the gap between promise and reality.