OECD Regional Development Policy Committee MULTI-LEVEL ... · MULTI-LEVEL GOVERNANCE, DECENTRALISATION, SUBNATIONAL FINANCE AND INVESTMENT 2017-2018 . SOME OPPORTUNITIES AND RISKS

OECD Regional Development Policy Committee

MULTI-LEVEL GOVERNANCE, DECENTRALISATION,

SUBNATIONAL FINANCE AND INVESTMENT

2017-2018

SOME OPPORTUNITIES AND RISKS OF DECENTRALISATION

S u b n a t i o n a l g o v e r n m e n t s a n d t h e O E C D

The wor ld ’s governments inc lude…

Among which:

• 31 have 1 layer of subnational government

• 42 have 2 layers of subnational government

• 23 have 3 layers of subnational government

17 Federal countries & 84 Unitary countries

Among OECD members…

9 Federal countries & 26 unitary countries and almost

138 000 subnational governments.

At the municipal level the same proportion have

less than 2 000 inhabitants as more than 20 000

less than 2 000 inhabitants,

30%

2 000-4 999 inhabitants,

16%

5 000-19 999 inhabitants,

24%

20 000+ inhabitants,

30%

Experienced in this diversity, the OECD understands the distinct challenges associated with effective multi-level governance relations and helps countries identify appropriate mechanisms to support better policy implementation at the subnational level.

2

S u b n a t i o n a l g o v e r n m e n t s a r e ke y e c o n o m i c p a r t n e rs

40% Is approximately the level of public expenditure occurring at the subnational level in OECD countries

Subnational governments are on average responsible for of public investment

59%

Did you know…

This matters because…

On average, subnational governments are responsible for:

• 59% of public investment

• 63% of total public staff expenditure

• 32% of public tax revenue

• 20% of public debt

40.3%

59%

31%

20%

Greece Chile

Estonia Greece

Canada

Canada

Canada Canada

0%10%20%30%40%50%60%70%80%90%

100%

Expenditure Investment Tax revenue Debt*

OECD Minimum Maximum

*: Debt OECD definition ie including, in addition to "financial debt", insurance reserves and other accounts payable. No data for Mexico, Chile and New Zealand.

OECD SUBNATIONAL GOVERNMENT EXPENDITURE BY ECONOMIC FUNCTION (% of general government, 2015)

S u b n a t i o n a l g o v e r n m e n t s a r e ke y e c o n o m i c p a r t n e r s

3

OECD SUBNATIONAL INVESTMENT BY AREA (2015)

…on average more than central governments

SUBNATIONAL SHARE OF PUBLIC INVESTMENT (2015)

…in areas critical for growth and wellbeing

92.8%

59.3%

52.6%

12.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Can

ada

Be

lgiu

mM

exi

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rael

Jap

anSp

ain

Au

stra

liaSw

itze

rlan

dG

erm

any

Un

ite

d S

tate

sO

ECD

35

Ital

yFr

ance

Fin

lan

dK

ore

aEU

Swed

en

Net

her

lan

ds

Cze

ch R

epu

blic

Po

lan

dA

ust

ria

Slo

ven

iaP

ort

uga

lD

en

mar

kN

orw

ayN

ew Z

eala

nd

Hu

nga

ryIc

ela

nd

Un

ite

d K

ingd

om

Luxe

mb

ou

rgLa

tvia

Turk

ey

Esto

nia

Slo

vak

Rep

ub

licG

ree

ceIr

ela

nd

Ch

ile

Subnational government Central government & social security

And they a lso invest…

*Other: defence; public order and safety; health; recreation, culture and religion; social protection.

Economic affairs / Transport,

39.8%

Education, 20.5%

General services, 9.4%

Housing and Community

amenities, 8.8%

Environmental protection, 6.3%

Other*, 15.3%

E n s u r i ng a f r u i t f u l p a r t n e rs h i p c a n b e t r i c k y …

4


E n s u r i n g a f r u i t f u l p a r t n e r s h i p c a n b e t r i c k y …


Managing the relationship between national and subnational levels can be challenging:

• Relationships are complex • Accountability may be unclear • Resource capacities may be low • Stakeholders are many and diverse • Objectives and priorities may not align

Solid multi-level governance practices help:

• Integrated policy approaches • Appropriately funded mandates

• Sound performance measurement • Clear attribution of responsibilities

• Vertical and horizontal coordination tools • Reliable data for evidence based policy making

• Strategies and programmes collaboratively generated

And when properly implemented so can decentralisation, which may:

• Build resource capacity • Create room for experimentation • Enhance transparency and accountability • Distribute national resources more equally • Strengthen opportunities for democratic governance • Favour stronger regional innovation and performance • Better match local needs and local preferences for public services

Ensur ing a f ru i t fu l partnersh ip can be t r icky…

…but i t doesn’t have to be


5

Source: OECD (2016), Subnational Governments in OECD Countries: Key data; OECD (2016), Subnational Governments around the World : Structure and Finance; Online database: database: http://dx.doi.org/10.1787/05fb4b56-en, based on OECD National Accounts.

and may have a pos i t ive inc idence on GDP

The OECD works with member and non-member governments to seize the opportunities and manage the challenges associated with diverse multi-level

governance contexts.

Here’s how…

TCD GIN COG KHM MLT GRM DOM JAM AZE BEN MWI BFA CRI CYP TUN SEN MUS MLI JOR ARM PRY SLV ZWE MYS CHL HND UGA PSE KEN GRC MAR TZA THA IRL TUR ALB

CPV

ECU NZL NGA KGZ GEO ISR MNE SVK PRT IDN HUN GHA SRB BGR LTU PER ROU KAZ MNG MDA SVN EST CZE LVA GBR FRA PHL HRV MEX COL POL ISL KOR NLD IND ITA UKR NOR

JPN AUS AUT USA VNM CHE DEU

CHN ESP ZAF

BRA BEL FIN RUS SWE

CAN

DNK

ARG

R² = 0.3555

0%

5%

10%

15%

20%

25%

30%

35%

40%

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000

SNG

exp

en

dit

ure

as

a %

of

GD

P

GDP per capita (USD PPP)

COMPARING SUBNATIONAL GOVERNMENT EXPENDITURE AS A % OF GDP AND GDP PER CAPITA (2013)

There appears to be a correlation between subnational government expenditure and GDP in OECD countries:


6


T h e O E C D M u l t i l e v e l G o v e r n a n c e P o l i c y A p p r o a c h

Since its inception in 1999, the Regional Development Policy Committee (RDPC) has become the pre-eminent international forum on multi-level governance. It leads the way in building dialogue and sharing experience among policy makers dedicated to regional and local development. As a body, it helps identify policy options and recommendations that sharpen multi-level governance mechanisms and boost subnational government capacity for more effective and inclusive regional development policies.

The RDPC is at the heart of the OECD Centre for Entrepreneurship, SMEs, Local Development and Tourism, and brings together government officials from all 35 OECD member countries, from OECD partner countries such as Brazil, China, India, Indonesia, South Africa, and others including Colombia, Costa Rica, Lithuania, Morocco and Peru. In addition, it benefits from input and insight from other international bodies such as the European Commission, the European Union Committee of Regions, UNDP, and UNHABITAT.

T h e O E C D R e g i o n a l D e v e l o p m e n t P o l i c y C o m m i t t e e

RDPC Meeting, 7-10 November 2016

B u i l d i n g n e t w o r k s …

In 2016, the OECD and United Cities and Local Governments (UCLG), with the financial support of the French Cooperation Agency (AFD), sought to establish a global Observatory on local government structure and finance. As a first step, a pilot study was published: Subnational Governments around the World: Structure & Finance. It is now proposed to further expand this initiative by formalising the Observatory in order to:

• Provide all levels of government with reliable data and indicators on subnational government structure and finance.

• Contribute to bridging the gap in subnational data and harmonised data availability.

• Offer comparative analysis on the performance of subnational governments in terms of local budget, fiscal and investment management, appropriate to whether they are federal or unitary.

• Provide standardised and transparent access to information.

• Contribute to evidence bases for regional and local policy development and reform, strengthen multi-level governance and make decentralisation policies more effective.

• Build constructive national and international dialogue on fiscal and financial diagnosis, support the exchange of experiences, peer-to-peer learning.

• Help monitor the financial ability of subnational government to implement the responsibilities entrusted to them and to design effective and efficient regional and local development policies.

T h e O b s e r v a t o r y o n S u b n a t i o n a l G o v e r n m e n t , F i n a n c e a n d I n v e s t m e n t


7

The OECD Network on Fiscal Relations across Levels of Government provides statistics, data and analysis on the relationship between national and subnational governments, and its impact on efficiency, equity and macroeconomic stability across OECD countries. It is serviced by the OECD’s Centre for Tax Policy Administration (CTP), the Economics Department, the Directorate for Public Governance, and the Centre for Entrepreneurship, SMEs, Local Development and Tourism. The Fiscal Decentralisation database is available online: http://www.oecd.org/tax/federalism/

T h e O E C D N e t w o r k o n F i s c a l R e l a t i o n s a c r o s s L e v e l s o f G o v e r n m e n t

…and a l ign ing with the g lobal agenda

We support the United Nations in ensuring the success of the 2030 Agenda for Sustainable Development Goals, focusing on issues related to:

Multi-level Climate Investment

• COP 22 and COP 23

• Climate Chance (Coalition on Multi-level Governance and Multi-stakeholder Action)

Public investment and local finance

• UN Conference on Housing and Sustainable Urban Development

• 5th UCLG Congress, World Summit of Local and Regional Leaders

• Addis Ababa Conference on Financing for Development

http://www.oecd.org/tax/federalism/









8



Provid ing ev idence for pol icy act ion…

U p - t o - d a t e s u b n a t i o n a l d a t a b a s e s

The statistical guide Subnational Governments in OECD countries: Key Data, is updated annually, and provides data on subnational governments in OECD member and partner countries. It is considered indispensable by policy makers looking for reliable data on subnational:

• investment • revenue and tax receipts • budget balance and debt • expenditure by economic function • government structure and municipal size The OECD Subnational Government Structure and Finance database is an online tool that generates datasets tailored to policy maker needs. It can be accessed at: http://dx.doi.org/10.1787/05fb4b56-en

The OECD offers public officials, academics and the private sector up-to-date data on subnational government structure and finance to support evidence-based policy making.

Subnational Governments around the World: Structure and Finance, is a unique resource on local level financial information. It aims to help officials at all levels of government address fiscal gaps and design effective and efficient development policies.

The OECD, in partnership with United Cities and Local Governments (UCLG), has gathered data on subnational governments in 101 countries, including in those where data collection is less developed or not publically available.

http://www.oecd.org/cfe/regional-policy/sngs-around-the-world.htm

http://www.oecd-ilibrary.org/urban-rural-and-regional-development/data/oecd-regional-statistics/subnational-government-structure-and-finance_05fb4b56-en























9

THREE DIMENSIONS TO MULTI-LEVEL GOVERNANCE SYSTEMS

L i n k i n g m u l t i l e v e l g o v e r n a n c e a n d r e g i o n a l d e v e l o p m e n t

Countries around the world are attuned to the complexity associated with multilevel governance systems – adjustments in one dimension often require adjustments in another. They are also increasingly aware of the significant role of these systems in reaching effective public investment and public policy outcomes.

The OECD works with officials at all levels of government to strengthen their multi-level governance practices in order to better realise regional development objectives and support policy initiatives, including decentralisation and broader territorial reform.

Territorial (re-) organisation of

administrative boundaries or structures (e.g. via

mergers)

Managerial (re-)organisation of

administrative processes

(e.g. service delivery, HRM, budget, IMC)

Institutional (re-)organisation of

powers, responsibilities,

resources (e.g. via

decentralisation)

The 2017 report Multi-level Governance Reforms: Overview of OECD Country Experiences offers an overview of multi-level governance reforms in OECD countries, focusing particularly on the institutional and territorial dimensions.

…and support ing pol icy with analys is


10



M u l t i - l e v e l G o v e r n a n c e S t u d i e s

The OECD Multi-level Governance Series offers policy-makers and other stakeholders guidance on establishing good multi-level governance practices in order to support achieving policy objectives.

This series includes diagnosis and recommendations on:

• trends in asymmetric decentralisation • operational guidance for policy makers • strengthening multi-level coordination practices • assigning responsibilities across levels of government • improving public investment practices and effectiveness • measuring spending power at different levels of government • ensuring higher quality, efficient and effective public service delivery • reinforcing transparency, accountability and citizen participation practices • benefits and risks associated with fiscal, political and administrative decentralisation – or

recentralision – reforms in developed and developing countries and strategies to address them

OECD Territorial Reviews offer policy makers at national, regional, and local levels tailored guidance for strengthening placed-based regional development in their countries. Each review includes context-specific analysis and recommendations for action, to:

• improve economic performance and overall well-being. • identify and overcome regional competitive, productivity and

inclusiveness challenges. • ensure that multi-level governance practices support attaining

national and subnational policy objectives.

Te r r i t o r i a l R e v i e w s

U n d e r t a k i n g t h e m a t i c s t u d i e s a n d c o u n t r y r e v i e w s

OECD subnational studies and reviews give public officials a chance to build dialogue and engage in collaborative networks with regional development stakeholders, in their territory and internationally. Tailored to country priorities, they help policy makers identify multi-level governance needs, including for decentralisation, and build context-specific solutions in a variety of areas, most recently by supporting:

• Chile to modernise its municipal system and strengthen decentralisation processes • Colombia to make the most of its public investment capacity • Ukraine as it institutionalises multi-level governance and decentralisation reforms

T h e O E C D R e g i o n a l D e v e l o p m e n t P o l i c y A p p r o a c h

11

S u p p o r t i n g m o r e e f f e c t i v e p u b l i c i n v e s t m e n t a c r o s s l e v e l s o f g o v e r n m e n t …

Public investment is a shared responsibility – among levels of government and with the private sector. It shapes choices, influences private investment and affects quality of life. For these reasons governments strive for investment success. Poorly managed public investment, or poor investment decisions, wastes resources, erodes public trust and can hamper growth opportunities. But, when done right, public investment can be a powerful tool to boost growth, and provide the right infrastructure to leverage private investment.

Coordinating across levels of government

Coordinating across policy areas

Strengthening capacity for public investment

Promoting learning across levels of

government

Ensuring sound framework conditions

at all levels of government

The OECD report Investing Together: Working Effectively across levels of Government, dissects the relationship between different government actors, vertically and horizontally. It offers a practical guide for policy makers to assess their needs for investment capacity development.

Strengthening multi-level governance and taking a comprehensive approach to public investment can help. This includes:




12

… w i t h g o o d p ra c t i c e r e c o m m e n d a t i o n s a n d i n d i c a t o r s

AVERAGE PERFORMANCE BY OECD COUNTRIES ON THE INDICATORS OF MULTI-LEVEL GOVERNANCE OF PUBLIC INVESTMENT (2016)

To support public officials make better, more effective investment choices the OECD offers comprehensive guidance with its Principles on Effective Public Investment across Levels of Government. These principles help governments put into action the multi-level governance practices that can render public investment more effective. The OECD Toolkit for Effective Public Investment is a powerful online self assessment tool to help countries implement these principles. It is an easy-to-use red-yellow-green light system that guides policy makers a self-directed evaluation of their government’s alignment with the Principles. Where there is room for improvement, the Toolkit offers concrete examples of what other countries are doing to address the same issues. Try it for yourself at: https://www.oecd.org/effective-public-investment-toolkit/ Countries are invited to adhere to the OECD Council Recommendation on Effective Public Investment across Levels of Government making a commitment to stronger multi-level governance practices to support public investment.

The OECD Indicators of Multi-level Governance of Public Investment currently under development shed light on performance in the different facets of multilevel governance, including vertical and horizontal coordination, institutional, fiscal, regulatory and planning practices.

0.00.10.20.30.40.50.60.70.80.91.0

Coherent planning

Coordination acrosssectors

Verticalcoordinationinstruments

Multi-level dialogue

Horizontalcoordination

Performancemonitoring

Regulatorycoordination

Cofinancingarrangements

Stable capitaltransfers

Transparentinformation

Borrowing rules

Balanced budgetrules

https://www.oecd.org/effective-public-investment-toolkit/













C o n t a c t s

Ms. Dorothée Allain-Dupré [email protected]

Ms. Isabelle Chatry [email protected]

And please visit: https://www.oecd.org/regional/regional-policy/multi-levelgovernance.htm

P a r t n e r s o r g a n i s a t i o n s

@OECD_local #OECDregions

http://www.oecd-ilibrary.org/

F o l l o w u s U s e f u l l i n k s

United Cities and Local Development

https://www.uclg.org/fr

European Committee of the Regions

http://cor.europa.eu/en/Pages/home.aspx

Lincoln Institute of Land Policy

http://www.lincolninst.edu/

World Bank

http://www.worldbank.org/

UN Habitat

http://unhabitat.org

F o r O E C D p u b l i c a t i o n s

mailto:[email protected]




https://www.oecd.org/regional/regional-policy/multi-levelgovernance.htm











OECD Regional Development Policy Committee MULTI-LEVEL ... · MULTI-LEVEL GOVERNANCE, DECENTRALISATION, SUBNATIONAL FINANCE AND INVESTMENT 2017-2018 . SOME OPPORTUNITIES AND RISKS

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