Why Multi-level

governance generates

added value?

Devolution of spending at lowers level of government is a feature of development

AUS AUT

BEL

CAN

CHL

CZE

DNK

EST

EU28

FIN FRA

DEU

GRC HUN

ISL

IRL

ISR

ITA JPN

KOR

MEX

NDL

NZL

NOR

OECD25

OECD34

OECD9

POL

PRT SVK

SVN

ESP

SWE

CHE

TUR

GBR

USA

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%

GD

P p

er

ca

pit

a a

s a

sh

ar

e o

f U

S G

DP

pe

r c

ap

ita

(%

, b

as

ed

o

n G

DP

pe

r c

ap

ita

in

US

D P

PP

)

SNG expenditure as a % of public expenditure

Subnational Governments are key policy actors across the OECD

40%

63%

50%

59%

32%

20%

Greece

New Zealand

Greece Chile

Turkey Greece

Canada

Switzerland Canada Belgium

Canada Canada

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OECD average Minimum Maximum

% of general government - 2013

The dramatic effect of the crisis on Public SNG investment across the OECD

In volume, base year 2000 = 100

Change in 2013 (%)

+0,1%

-2,3%

-0,8%

+1,0%

-1,4%

+0,2%

100

105

110

115

120

125

130

135

140

145

150

GDPTotal expenditureDirect investment

Policies

Multi-level Governance reforms: three interconnected dimensions

Institutional:

re-organising powers,

responsibilities and resources

Public management:

re-organising administrative

processes

Territorial:

re-organising territorial structures

France

Finland

Italy

New Zealand

Japan

Most OECD countries are undertaking Multilevel Governance reforms

Institutional

reforms

Fiscal

reforms

Territorial

reform

at regional

level

Territorial

reform at

intermediary

level

Municipal

(mergers,

Metropolitan)

Australia X X State level

Austria X State level

Belgium X X Regional level Regional level

Germany X X State level State level

Spain X X + Regional level

Chile X X X

Czech

republic X X

Estonia X X X

Finland X X X X

France X X X ? X

Greece X X X X

Hungary X X X

Iceland X X

Ireland X X

Italy X X X X

Japan X X ? X

Luxembourg X

Netherlands X X ? X

New Zealand X X

Norway X X X X

Poland X X ? X

Portugal X X (infra-

municipal)

Sweden X X X X

Turkey X

United

Kingdom X X X

• Negative impact of fragmentation can be reduced through organisations that coordinate policies in functional metro areas

– Approximately half of the productivity penalty from municipal fragmentation disappears when governance bodies exist and have powers

• Metropolitan governance bodies are common throughout the OECD, but only 18% have regulatory powers

A strong case for improving governance of functional metro areas

Fragmented metro governance hinders city productivity

Fragmented metro governance increases segregation of people

-.05

0

.05

.1.1

5

Ine

qu

ality

betw

een

loca

l ju

risd

ictio

ns, (

Co

mpo

ne

nt p

lus r

esid

ua

l)

0 .2 .4 .6 .8 1

Administrative fragmentation

OECD Governance Models for rural-urban partnerships

Explicit rurban partnerships

Rennes (France)

Geelong (Australia)

Nuremberg (Germany)

Central Zone of West Pomeranian Voivodeship (Poland

BrabantStad (Netherlands)

Implicit rurban partnerships

Forlì-Cesena (Italy)

Extremadura (Spain)

Castelo Branco (Portugal)

Central Finland (Jyväskylä and Saarijärvi-Viitasaari) (Finland)

Lexington (United States)

Prague/Central Bohemia (Czech Republic)

Model 1 Model 2 Model 3 Model 4

Delegated functions No delegated functions Delegated functions No delegated functions

Rennes (France) Geelong (Australia)

Nuremberg (Germany)

Central Zone of West Pomerania Voivodeship (Poland)

BrabantStad (Netherlands)

Extremadura (Spain)

Forlì-Cesena (Italy)

Lexington (United States)

Prague (Czech Republic)

Central Finland (Jyväskylä and Saarijärvi-Viitasaari) (Finland)

Castelo Branco (Portugal)

OECD Tools

• Invest using an integrated strategy tailored to different places

• Adopt effective co-ordination instruments across levels of government

• Co-ordinate across SNGs to invest at the relevant scale

Pillar 1

Co-ordinate across

governments and policy areas

• Assess upfront long term impacts and risks

• Encourage stakeholder involvement throughout investment cycle

• Mobilise private actors and financing institutions

• Reinforce the expertise of public officials & institutions

• Focus on results and promote learning

Pillar 2

Strengthen capacities and promote policy learning across

levels of government

• Develop a fiscal framework adapted to the objectives pursued

• Require sound, transparent financial management

• Promote transparency and strategic use of procurement

• Strive for quality and consistency in regulatory systems across levels of government

Pillar 3

Ensure sound framework

conditions at all levels of

government

OECD Recommendation on Effective Public Investment Across Levels of Government

16

Strengthening capacities for decision-makers: what priorities for the EUSAIR strategy?

National & subnational governments:

Coordinate across sectors: Blue Growth, Connecting the Region, Environmental Quality and Sustainable Tourism are all cross-sectoral !

…all issues involve subnational governments, civil society and private actors

Identify a set of priorities with a macro-regional/transnational dimension: Assess the needs of the Macro-Region; identify investment priorities and risks

Align existing programmes/funding with the objectives and priorities of the Strategy: institutional mapping of all programmes/projects which could be connected to the Macro-Region

Avoid duplicating but rather seek to articulate the strategy with existing programmes

Macro-regional level: Build credible governance mechanisms to develop & implement the

Strategy: stable coordinating institutions, well-identified, not multiplied

Ensure political support

Connect the strategy with existing programmes/funding

Use the Strategy as a catalyst to foster coordination and align investment priorities

Communication: focus on the value added of the Macro-Regional approach compared to traditional approaches

Learn from other Macro-Regions

Strengthening capacities for decision-makers: what priorities for the EUSAIR strategy?

• Practical guidance for each of the 12 Public Investment Principles

• Country profiles with data & indicators

• Recent development s and good practices in countries

• Checklist and self assessment tools

• Peer learning and capacity-building: Disseminate examples of good practices , data and indicators and help governments at all levels diagnose key challenges for investment

• Monitoring: Follow-up reforms and recent developments in this field

Implementation Toolkit:

Key objectives:

Supporting the implementation: Toolkit, Indicators and Country studies

Governance Indicators based on the OECD Public Investment Recommendation

Governance dimensions: a quantification

Australia

Germany

Mexico

Spain

Switzerland

United States

Chile

Czech Republic

Denmark

Estonia

Finland

France

Greece

Hungary

Italy

Korea

Netherlands

New Zealand

Norway

Poland

Portugal

Slovak Republic

Slovenia

Sweden

United Kingdom

3.5

4

4.5

5

5.5

6

6.5

7

0.80 1.00 1.20 1.40 1.60 1.80 2.00

Qu

alit

y o

f o

vera

ll in

fras

tru

ctu

re

MLCI

Composite indicator (preliminary) on the existence of multi-level coordination (MLCI)

The MLCI and the WEF Index on the quality of infrastructure

Objective Reviewing and assessing multi-level governance challenges likely to hamper policy outcomes in support of the objectives set out in the Macro-Region Strategy Scope: The project would involve 2 phases: (i) Step 1: a diagnosis multi-level governance frameworks in each of the

eight countries involved in the Adriatic and Ionian Region (end 2016- 2017);

(ii) Step 2: a methodology for monitoring progress in institutional and administrative capacity-building, (2017-end 2018)

Capacity building and Peer learning Identification of benchmarks in OECD countries which can benefit to the Macro-Region ; capacity building seminars

OECD support to the EU strategy for the Adriatic and Ionian Region

THANK YOU!

Joaquim.oliveira@oecd.org www.oecd.org/effective-public-investment-

toolkit