Is Warsaw the EU’s smallest economic capital?

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Pełny ekran

The Warsaw metropolitan area was home to nearly 3.3 million people in 2023, according to Eurostat data. Poland’s total population stood at 36.8 million, meaning the capital region accounted for around 9% of the country’s inhabitants.

Compared with other EU member states, this was the fourth-lowest share of the national population living in the capital region. Only the Netherlands and Germany (6% each) and Italy (9%) recorded lower figures. It is worth noting, however, that The Hague, Berlin and Rome are not their countries’ leading economic centers. In that sense, Warsaw can be described as the EU’s smallest economic capital, measured by its share of the national population.

The share of the population living in the capital is generally low in countries with large populations, such as Romania (12%), Spain (14%), and France (18%). In such countries, the population is typically spread across a larger number of major cities. Poland follows the same pattern.

In smaller countries, by contrast, capitals tend to play a much more dominant role. Estonia and Latvia are prime examples, with around half of their populations living in the capital region.

Where do capitals dominate more—and where less?

As a rule, capital regions generate a larger share of national income than their share of the population would suggest. This is evident from the chart, where the trend line for capital regions’ share of GDP runs around 7–8 percentage points above the trend line for their share of the population.

Part of this, however, is a statistical effect. Capitals are typically home to the headquarters of the largest companies, whose profits are recorded in the local GDP regardless of where the underlying economic activity actually takes place.

The Warsaw metropolitan area accounted for 17% of Poland’s GDP in 2021, the latest year for which data are available. In other words, it was broadly in line with the overall trend. As a result, GDP per capita in the capital region was almost twice the national average.

Countries below the trend line are those where capital regions are less economically dominant. This is clearly illustrated by the Netherlands, Germany, and Italy, where the capital regions generate roughly the same share of value added as their share of the national population would imply.

Austria and Ireland also stand out for having similar proportions. The Vienna metropolitan area is home to 33% of Austria’s population and generated 35% of the country’s GDP. In Dublin, the figures are 43% of the population and 46% of GDP, although these numbers should be treated with caution given the accounting practices that have inflated Ireland’s economic statistics.

There are also many countries where capital regions are far more dominant than the European average. This is particularly true across Central and Eastern Europe. In Romania, the capital region accounts for 28% of GDP while representing just 12% of the population. Slovakia shows a broadly similar pattern. Budapest is another striking example: although the metropolitan area is home to 31% of Hungary’s population, it generates nearly half of the country’s gross value added.

Among Western European countries, France stands out. The capital region is home to 18% of the population but produces 30% of the country’s GDP.