This chapter presents multi-level governance tools that allow all levels of government to function more effectively and efficiently and manage relationships in a shared responsibility environment. The use of a place‑based approach to regional development in a context of shared responsibilities requires a management architecture that combines a set of results-oriented multi-level governance instruments. This chapter focuses on instruments that facilitate vertical co-operation across levels of government as well as interregional co-operation. It also emphasises the need to develop strategic capacities, especially for monitoring and evaluation. Finally, it provides some tools for stakeholder concertation and participation to ensure the success of place-based policies.
Regional Governance in OECD Countries
5. Multi-level governance tools: Enabling sound regional governance
Abstract
Introduction
Growing regional governance reforms and increasing regional authority mean a more complex system of multi-level governance in which all levels of government work. Adopting effective instruments and tools that allow all levels to function more effectively and efficiently and manage relationships in a shared responsibility environment is thus of utmost importance. And this is true in all contexts, independently of which type of regional governance model a country has chosen. Multi-level governance instruments – which can be more or less binding, flexible and formal – generally serve two purposes: 1) to co-ordinate public policies and investments among levels of governments and stakeholders; and 2) to reinforce capacity for designing and implementing policy and investment at all levels.
To design and implement place-based regional development policies and ultimately reap positive regional development outcomes across all regions, countries need to adopt sound multi-level governance instruments and establish effective co-ordination mechanisms across levels of government. Making the most of regional governance models is particularly crucial in the current context of a growing “geography of discontent” and increasing divides between territories, in particular between places that feel left behind by globalisation and technological change and those which have seized the opportunities offered by these megatrends. Good governance is indeed associated with higher levels of productivity and catching-up dynamics and can help promote strategies for inclusive growth. Governance arrangements are also crucial to increase the impact of regional development policies in regions and cities.
The use of an integrated place-based approach to regional development in a context of shared responsibilities requires a management architecture that combines a set of results-oriented multi-level governance instruments. OECD countries have resorted to different sets of mechanisms that allow and facilitate better governance of regional development policies. Different mechanisms can serve multiple and complementary objectives; determining which of them to use and combine will strongly depend on the country’s political and cultural context, the capacities of national and subnational governments, the degree of path dependency of existent policies, and the objectives pursued, among others. In the end, it is a suitable combination of different mechanisms that will help countries to improve the institutional environment and the way in which the public budget is spent and invested.
Ensuring vertical co-operation and co-ordination across levels of government
In a multi-level governance context, the regional level has a strategic position, at the intersection of the national, intermediate and local levels of government, which are mutually dependent on each other for achieving their policy goals. Regardless of the institutional context, the regional level has a strategic position and as such plays a key role in ensuring and enabling vertical co-ordination and developing a strong, trusting and co-operative relationship among sectors and levels of government.
Promoting vertical co-ordination, co-operation and dialogue between different levels of government allows producing outcomes that are aligned and sufficiently clear for all actors. Countries can rely on a number of instruments to ensure that policies and investment decisions are well co‑ordinated across levels of governments: contractual agreements, co-financing arrangements, conditionalities, formal participation channels and inter-governmental committees. These tools help to build ownership, trust and a sense of fairness (OECD, 2018[1]).
The COVID-19 pandemic has shed light on the need to strengthen vertical co-ordination mechanisms across OECD countries. Vertical co-operation between regional and other levels of government is important not only to meet the immediate needs that arise from the pandemic but also to ensure future capacity to do so, through coherent recovery strategies and sustained public investment. Effective co‑ordination across levels of government may help each level have sufficient space and powers to recover. Co-ordination with other levels of governments – regardless of whether they operate in centralised or decentralised contexts – is key for regions to become levers for the social and economic recovery, in particular when tackling issues of regional importance (e.g. employment, economic development, transport and health).
A co-ordinated regional approach to recovery can enable maximising the resources available to support regional economies, optimise the impact of aid packages and increase accountability. As the pandemic unfolded, several support schemes for businesses, households and lower levels of government were designed at different levels of government, with varying degrees of effectiveness. Co‑ordination is crucial to ensure even access to financial relief to support investment and guarantee that the funding benefits all. Through participatory regional taskforces or joint regional committees, decision makers from the top are more likely to design policies that integrate the needs of subnational governments, citizens, and local and regional businesses. This will increase accountability, and therefore the acceptance of potential reforms and recovery plans. At the same time, it can lay the foundations for more solid and mature relationships across levels of government, and between governments and citizens.
Deal-making and contractual arrangements
The use of formal contractual arrangements, such as contracts, deals or agreements, can help ensure efficiency in decision making and policy making by strengthening vertical co-ordination and building trust between national, regional and local governments. Contracting or deal-making approaches can favour information sharing and mutual understanding in how to address a common policy priority, while at the same time reduce transaction costs for implementing a policy. In particular, contractual agreements can clarify “grey areas” where responsibility for action or outcomes is not clearly established. In a multi‑level context, responsibilities for each level of government or institution can sometimes be shared, unclear or even overlap. By defining the mutual obligations of parties and agreeing on authority, respective duties and enforcement mechanisms, contracts can help manage joint, unclear or overlapping responsibilities in a multi-level context.
Contracts across levels of governments may bring a series of benefits for policy making, including fostering long-term regional development policy making and building trust. Contracting approaches can also generate trust between public actors for their future endeavours. Both central and subnational governments may also seek to innovate in particular areas, building new capacities and new approaches to policy making. In these cases, a contract is a tool for collective learning (OECD, 2018[1]). Through this, contracts may facilitate the establishment of a long-term perspective on regional development policy making. Indeed, while in the past the focus of contracts was mainly on delegating functions through earmarked funds to specific programmes and purposes, there is an increasing effort to provide incentives upfront so as to spend funds toward desired and agreed-upon goals and to monitor achievements after the funds are spent.
To achieve its objectives, a contract between levels of government must encompass some key elements:
address information asymmetries transparently and with interaction between levels of government
identify a common target
clearly define the contributions of each party, ensuring the possibility for each party to be accountable for its own contribution
specify indicators for assessing the implementation of the agreed tasks
put in place an enforcement mechanism for making the commitment credible (internal, external or by a third party).
Box 5.1. Contracts across levels of governments: Managing flexibility and stability for regional development policies
In times of fiscal constraint and uncertainty, governments need to balance long-term regional development policies seeking to provide certainty for the public and private sectors with the need to adapt these policies to new priorities and innovation. Contracts across levels of government, if defined properly, can help all levels of government respond to these challenges.
Contracts across levels of government can be defined broadly as any arrangement that reorganises the rights and duties of governments, other than by way of the Constitution. They define mutual obligations of parties, which must agree on authority (the assignment of decision rights), respective duties and enforcement mechanisms.
It is possible to distinguish three types of contracts fulfilling different objectives:
Empowerment contracts can help subnational authorities during the early stages of decentralisation to develop new capacities and gain greater autonomy in dealing with regional development policies.
In delegation contracts, the central government delegates the implementation of specific tasks to a subnational government capable of fulfilling those tasks. Delegation is based on the assumption that regional and local actors are better positioned to implement national policies at the local level. Often such contracts are used with the assumption that they will also lead to greater efficiency in public spending.
Policy-sharing contracts see the central and subnational governments co-operating to fulfil certain tasks.
In the context of regional development, contracts can be adapted to the needs of different regions. The key point is to specify the regional development priorities to be addressed by contracts, which can be supported by a careful assessment of the needs and opportunities of each level of government.
Source: OECD (2018[1]).
The use of contractual arrangements can also bring a series of challenges for all levels of governments; the design of the contract is thus a key element for its success. Contract arrangements can generate administrative burdens for regional structures, making access to financing too complex and discouraging. Contracts can also create some inertia, making it difficult to adapt to emerging needs that cannot be foreseen in advance. It is also important to address accountability, transparency and scrutiny challenges that surround these arrangements. To overcome these challenges, there are some key lessons to take into account when designing contacts – lessons based on years of experiences in different countries and a well-developed theoretical approach to contractual arrangements. For example, despite the importance of providing stable arrangements over the long term, contracts must remain relatively flexible to enable the financing of new regional projects over time and facilitate the reallocation of funds if necessary (OECD, 2020[2]). At the same time, introducing citizen engagement mechanisms, for example such as public consultation and participatory financing mechanisms, throughout the duration of the contract can increase transparency regarding the use of investment funds (O’Brien and Pike, 2018[3]). An additional benefit of greater transparency is valuable public support for local projects.
Countries are increasingly making use of contractual arrangements for regional development policy delivery. In the European Union (EU), Cohesion Policy is delivered through programmes that are, in fact, several different contractual relationships of different natures. These long-term programmes in EU Cohesion Policy provide stability, which is seen as a major advantage. In France, contracts between the French central government and its regions (contrats de plan état-region) serve as a key planning, governance and co‑ordination instrument in regional development policy. Iceland also makes extensive use of contracts between the national government and its regions to strengthen the capacities of its regional associations and devolve them more and more responsibilities over time. The model of contracts and formal arrangements between a region and a state are also common in the context of city-regions. This is, for instance, the case of City Deals in Australia, the Netherlands and the United Kingdom (Box 5.2).
Box 5.2. Contracts across levels of government: The cases of France, Iceland and the United Kingdom
France: State-region contracts, City Contracts and Recovery and Ecological Transition Contracts
France has a long history of contractual arrangements linked to the decentralisation of specific tasks to regions, departments and, to some extent, municipalities. State-region contracts, launched in 1984, initially aimed at building regional capacity through a long process of negotiation between subnational governments and the central government’s deconcentrated bodies. These contracts established the objectives, implementation and funding modalities for specific tasks. They can also have an incidence on financial transfers from the central level to the subnational one. France is now in its sixth generation of state-region contracts, and through this process, regions have developed extended capacities and responsibilities in terms of economic development, employment and vocational training, including larger budgets and the involvement of new actors (e.g. academics, civil society).
Urban policy has generally been focused on renewal in deprived neighbourhoods in cities of all sizes. It is formalised through city contracts (contrats de ville) concerning urban, social and economic development, in particular to address the devaluation of certain areas and urban and social segregation. These are annexed to state-region contracts and mainly passed between the state and the agglomerations, which allows pooling the actions of different communes.
State-metropolis pacts were launched in 2016 to empower and support investment in metropolitan areas; between 2016 and 2018, 485 contracts for rural development were signed to revitalise rural areas through initiatives in social cohesion, economic attractiveness, access to public services, mobility solutions, access to digital technologies, and the ecological and energy transition.
In 2020, France introduced Recovery and Ecological Transition Contracts for inter-municipal cooperation bodies (Contrat de relance et de transition écologique - CRTE). These contracts last from 2020 to 2026 and provide a framework for the territorialisation and coordination of a range of public policies that as a whole contribute to the challenges of territorial cohesion and the ecological transition. The priorities of the contract are defined locally and agreed upon with the State. IMCs can access funding for the projects in the contracts from a variety of sources including the Local Investment Support Grant (DSIL), EU funds, State government ministries implicated in the contract, and the private sector
Iceland: Regional-level plans
Since 2013, Iceland has used successive five-year contracts between its regions and the national government to ensure the financing and implementation of the regional-level plans. For example, the Northwest Region has signed three consecutive contracts with the Ministry of Transport and Local Authorities and the Ministry of Education and Culture to support the implementation of its regional plan, which emphasises regional development and innovation, culture, environmental issues, and education and population. These contracts ensure funding against clear and measurable success indicators established by the region. The Northwest Region’s experience is that this approach has helped increase trust on behalf of the government. Over time, the region has fewer rules to abide by, an increased allowance for administrative costs and no more constraints on the distribution of funding between priority projects and competitive funds. In addition, more autonomy has been granted on who is appointed to competitive fund distribution committees. There is also now the possibility for other ministries to be part of the contract. Trust has also increased on the side of the regions, as has capacity. There has been a visible increase in the degree of decentralisation on the part of the national government. Building on experience from the past, regions are developing increasingly stronger plans. For example, the Northwest Region’s 2020-24 contract has received support from expert consultants, the costs of which were paid by the Ministry of Transport and Local Authorities. The plan has a stronger local focus than in the past thanks to the greater degree of autonomy, and measurability is considered to be better.
Scotland (United Kingdom): City Deals
In Scotland (and more broadly in the United Kingdom), City Deals correspond to tripartite agreements between the UK central government, the devolved government of Scotland and a number of local authorities from neighbouring areas in Scotland. For instance, in the case of the Glasgow City Deal, the ultimate decision-making body, the Glasgow City Region Cabinet, is made up of the leaders of the eight member authorities. Meetings are held every eight weeks and papers are made available to the public. The City Deal is set out according to an Assurance Framework. This document, to be reviewed annually, sets out the governance structures and arrangements for the City Deal Programme; how business cases will progress, be evaluated and agreed upon, and how the funding mechanisms will work. Funding for projects comes from the UK government, the Scottish government and, whenever possible, EU funds. The total amount contracted is paid over a 20-year period and unlocked partially every 5 years, depending on the delivery of agreed outputs and outcomes.
Sources: (Charbit and Romano, 2017[4]); OECD (2019[5]); O’Brien and Pike (2018[3]).
Inter-governmental bodies
Inter-governmental bodies can be important assets for designing and implementing regional governance reforms and aligning interests and priorities for regional development across levels of government (OECD, 2017[6]). Inter-governmental bodies provide regional and other subnational actors with the opportunity to share perspectives and experiences; understand the needs and problems of other levels of government; negotiate with each other; and obtain help in the design, implementation and monitoring of policies or reforms. From the central government’s perspective, inter-governmental and dialogue bodies can also serve to establish a clear and transparent priority-setting process, and provide high-level guidance, co-ordination and discussion of matters related to regional development. Inter‑governmental bodies can be particularly useful to design and implement regional governance reforms (Box 5.3).
Inter-governmental bodies or co-ordination tools to ensure policy alignment can take different forms, such as a dedicated permanent policy exchange, conferences or councils. They can be ad hoc or permanent, consultative or assume co-ordinating functions. These bodies can be more or less formal, regular, and with or without decision-making authority. Inter-governmental committees are generally chaired by the prime minister and bring together the presidents or heads of states and regional governments, as well as presidents of local government associations (OECD, 2017[7]). Involving lower levels of government in policy making is important to ensure that subnational priorities are considered and that all stakeholders are on-board to contribute to the successful policy implementation. This involves the sharing of simple and credible information transparently and continuously between the various levels.
Developing data at the right scale and ensuring a cross-sectoral approach are key for the success of inter-governmental co-ordination bodies. To reach their potential, inter-governmental bodies need to be built on solid and reliable territorial data. In countries where there are not any public databases on regional statistics, these bodies can contribute to enhancing the quality and reliability of such data. To this end, inter-governmental committees may include sub-committees on fiscal issues, and governments at all levels can promote the creation of regional statistics databases (e.g. Spain) (OECD, 2019[5]). It is also important to adopt a cross-cutting approach to regional development that takes into account a wide range of sectors. The advantage of having interlocutors from different levels of government interact must not be at the expense of an overall vision of regional development and the attractiveness of the territories.
Box 5.3. Ad hoc inter-governmental bodies to design and implement regional governance reforms
Regional governance reforms need a multi-stakeholder approach – not only to gather all the relevant perspectives, but also to ensure ownership and buy-in by all the parties that will be impacted by the reform. This is why a key recommendation of several OECD country studies is to establish a “decentralisation or multi-level governance reform committee” involving key ministers, subnational governments’ associations, business and citizens’ associations, universities, etc. to accompany the design and implementation of the decentralisation reform. Setting up such a committee could help to increase legitimacy, better anchor the decentralisation agenda within the national reform programme and foster its sustainability.
Such types of ad hoc and temporary commissions can be more or less independent, depending on their composition, administrative dependence and operational means (secretariat and staff, budget, communication). They may have more legitimacy and impact if they are directly connected to a high level of government (presidency, prime minister, parliament). These fora may involve experts and different stakeholders from civil society and the public and private sectors.
This practice has already been employed by several countries. It is a well-developed method in Nordic countries such as Denmark and Finland, as well as in other countries such as Japan.:
In Denmark, the Commission on Administrative Structure, appointed by the government in 2002, performed a critical review of the Danish governance system. The commission played a major role in reform processes. It was established to provide a technical analysis of decision making regarding changes in public sector tasks. Its tasks were to assess the “advantages and disadvantages of alternative models for the organisation of the public sector”. The commission accomplished its work in 2003 and released recommendations in January 2004, proposing six different administrative models.
In Finland, working groups in charge of drafting the recent reform measures included members from the two coalition government parties and opposition parties as well as members from the Finnish Association of Local and Regional Governments. This led to a large political support base in favour of the reform despite a change in government during the reform process itself.
In Japan, committees were in charge of drafting and monitoring the successive decentralisation reforms. The first committee, the “Decentralisation Promotion Committee”, was appointed in 1995. Although it was not independent from the central government Ag, committee members were typically from the private sector, local government, academia, etc., not politicians, which helped to build legitimacy. The committee was charged with drafting recommendations for the reform, to be submitted to the Prime Minister. The committee was empowered with the ability to conduct investigations and deliberations, and could request information from both local and national authorities. The committee published an interim report and decentralisation promotion plans. These recommendations were discussed with the central government, underwent some alterations, but were implemented within the Omnibus Decentralisation Law. Thereafter, new committees were created to design and implement new reform steps in 2001 and 2007 (the Trinity Reform and the 2nd Decentralisation Promotion Reform). In 2010, a Local Administration and Finance Examination Council was created to examine the review of the Local Autonomy Law. A bill creating a dialogue forum between the central government and local associations was also adopted in 2011.
Source: OECD (2017[8]).
Taking advantage of interregional co-operation opportunities
An increasing need for national and international co-operation across regions
Cross-jurisdiction co-operation at the regional level appears as important and relevant as it is for local governments – especially after the COVID-19 pandemic. The challenges that inter-municipal co‑operation schemes aim to address can be also found at the regional scale: regions need to collaborate not only to manage joint policy competences, but also to minimise the overlap of responsibilities, invest at the relevant scale and avoid cross-purpose investments, among others. The need for interregional co‑operation was evident when the COVID-19 pandemic hit. Externalities linked to the coronavirus were so high that no single jurisdiction was able to manage these on its own. Co-ordination across regions appeared essential to avoid disjointed or contradictory responses, and with this, avoid putting the population at collective risk. Horizontal co-operation between regions is thus as important as vertical co‑operation, particularly in decentralised and federal countries, which may have more differentiated approaches across territories. This is why together with the rise of regional governance reforms, regions are also increasingly adopting co-operation arrangements, be it for advocacy purposes, to share experiences or address common challenges.
The COVID-19 crisis has made evident the need to strengthen interregional co-operation, not only nationally but also across borders. The COVID-19 crisis also revealed the importance of cross-border co‑operation, as in general – and at least in the first phase of the crisis management – countries conducted uncoordinated border closures and unilateral measures. In a survey conducted by the OECD and the European Committee of the Regions, the lack of cross-border co-ordination was identified as the strongest co‑ordination issue. Around one-third of respondents reported that cross-border co-operation between subnational governments was broadly ineffective or non-existent, while only 22% found such co-operation effective or very effective (OECD-CoR, 2020[9]). However, several cross-border co-operation mechanisms did function well through the crisis and, arguably, allowed for increased resilience and paved the way for reinforced co-operation (e.g. cross-border task force created in the Euregion Meuse-Rhine, the Tyrol-South Tyrol-Trentino Euroregion) (European Committee of the Regions, 2020[10]; OECD, 2021[11]).
Co-operation across regions, in the form of city networks or megaregions, may also help tap the benefits of agglomeration economies while minimising its costs. Greater connectivity between cities that are economically complementary but spatially too remote from each other to “cluster” physically can allow them to “borrow” agglomeration economies while minimising the costs of large cities. If, for example, two similar sized cities become highly connected through a well-developed transport network, this can mimic a doubling in population size by reducing transport and communication costs, ensuring faster and cheaper access to product markets, and enlarging and diversifying labour pools. Such city networks can sometimes expand to “megaregions”. This new larger economic scale encompasses a polycentric grouping of cities and their hinterlands that are connected through transport infrastructure, economic linkages, topography, an environmental system, or a shared culture and history, which together shape a common interest for this wider territory. This search for borrowed agglomeration economies is an increasingly relevant factor for the competitiveness and attractiveness of cities and territories in Europe. This is the case, for example, of Western Scandinavia, where the capital of Norway and the second- and third-largest cities of Sweden are located in relative proximity to each other and form a potential megaregion (OECD, 2018[12]).
Different forms of interregional co-operation
At the national level, regions usually join forces for advocacy purposes. The most common form of interregional co-operation is those that aim to advance a regional agenda or join forces to make the “voice of regions” stronger. This is the case, for example, in France, where the Association of Regions (Association des Régions de France) was set up by the presidents of the regional councils in 1998 to raise the voice of the regions vis-à-vis French authorities and European institutions, and organise consultations and exchanges of good practices among regions, among others. In the United States, the National Governors Association is a political organisation founded in 1908 grouping the governors of the 55 states, territories and commonwealths.
At the cross-border level, regions are also increasingly collaborating, sharing experiences and advocating in the form of thematic networks or multi-purposes bodies. Regions can collaborate internationally to share expertise and join forces in the framework of international thematic co‑operation frameworks, for example focused on climate issues, food and agriculture. Regions4, for example, represents 41 regional governments from 21 countries on 4 continents. Established in 2002 as the “Network of Regional Governments for Sustainable Development”, it promotes collaboration in the fields of climate change, biodiversity and sustainable development. Regions4 is officially recognised before several entities of the United Nations system (the United Nations Framework Convention on Climate Change, the Convention on Biological Diversity, the United Nations Department of Economic and Social Affairs, the United Nations Environment Programme, and the United Nations Development Programme) and is also involved in EU initiatives. The Scandinavian Arena is another example of co-operation between cities and regions. This alliance, through a political steering group, encourages discussions on matters of common interest especially for rail infrastructure development and better integrated transport planning between Denmark, Norway and Sweden within a broader development vision. In the same vein, regions have also increasingly joined institutional and multi-purpose bodies, such as associations of regional governments (e.g. the Assembly of European Regions and the United Cities and Local Governments Forum of Regions) and inter-governmental bodies as consultative organisations (for example the European Union Committee of Regions and Cities and the Regional Chamber of the Congress of Local and Regional Authorities).
National and international regional co-operation is necessary in certain contexts to adopt co‑ordinated regional development strategies and create together a more competitive territory. Interregional co-operation in some cases allows planning and investing at the relevant scale. It also allows finding joint solutions to collective cross-border problems, ranging from infrastructure to the labour market and climate change issues and regulations. In this sense, cross-regional co-operation is also a key for recovery efforts, as they help avoid a fragmented approach to public investment recovery strategies. This is why, for example, the EU has been working to facilitate and promote interregional co-operation through macro-regional strategies and specific instruments for several years. Co-funded by the European Regional Development Fund, the five successive series of Interreg have profoundly shaped cross-border collaboration in the EU (Box 5.4). Interregional (or macro-regional) co-operation is thus now widely used by regions to make the most of international funding opportunities, in particular from the European Regional Development Fund and the Cohesion Fund. It is also promoted to find quicker and more effective solutions to local and regional issues through peer-to-peer exchanges. Interregional co-operation is widely used in Nordic countries and in the Balkans (e.g. Danube region, Adriatic-Ionian, Alpine regions, Visegrad Four). This approach was also recently taken by Colombia, where the Pact for Decentralisation (Law 1962/2019) led to the strengthening of Administrative and Planning Regions (RAP), already referred to in the Constitution. The RAP is an associative scheme to promote co-operation between regions. The reform aimed at articulating the nation’s development model with the local governments’ agenda and reducing existing disparities between regions. In 2022, RAPs became formal macro-regional entities with their own legal status, autonomy and their own assets, although they do not form an electoral constituency. RAPs are financed with resources from their constituent subnational governments and central government transfers. There are currently five RAPs: Central, Pacific, Caribbean, Eje Cafetero and Amazonia.
Box 5.4. Interreg collaboration: Some examples
Interreg is one of the key instruments of the European Union (EU) supporting co-operation across borders through project funding. It aims to jointly tackle common challenges and find shared solutions in fields such as health, environment, research, education, transport, sustainable energy and more. Some interesting examples of successful Interreg projects include:
The STRING Network, set up in 1999, brings together six partners (Region Skåne in Sweden; the Capital Region of Denmark, Region Zealand and the city of Copenhagen in Denmark; the city of Hamburg and the Land of SchleswigHolstein in Germany). It was initiated as an Interreg A project with a focus on establishing a new fixed link between Denmark and Germany. This aim materialised in 2008 with the signature of a treaty between Denmark and Germany concerning the construction of the Fehmarn Belt link. A permanent STRING Secretariat was established in 2011 and promotes collaboration in the field of infrastructure, tourism and culture, science and development, green growth, and addressing cross-border barriers more generally. The STRING network is currently gaining further momentum and discussions are underway concerning its enlargement.
The Scandinavian Arena, formed in 2000, was an initiative of the Swedish Ministry of Foreign Affairs and started as a political collaboration between representatives from Denmark, Norway and Sweden. It later acted as the political steering group for the Interreg “Scandinavian 8 Million City” project, which investigated the potential benefits of establishing a high-speed railway connection between Oslo, Gothenburg and Copenhagen (for a more detailed discussion, see OECD (2018[12])). Since the project ended, the Scandinavian Arena has remained, but has lost much of its initial momentum.
The primary Interreg programme that promotes cross-border collaboration in Western Scandinavia is the Öresund-Kattegat-Skagerrak programme (ÖKS), which includes Western Scandinavia as well as Buskerud, Vestfold, Telemark, Aust-Agder and Vest-Agder in Norway, and the regions of Hovedstaden, Sjælland, Midtjylland and Nordjylland in Denmark. The programme has existed since Interreg IV (2007-13). In the period 2007-13, the ÖKS programme supported about 125 cross-border projects, which brought together around 400 partners from Denmark, Norway and Sweden (mainly universities, regions and large municipalities). The projects were supported with a total budget of EUR 120 million and focused on: increased sustainable economic growth; physical planning and organisational interlinked regions; and increased daily integration. The ÖKS programme was renewed for the period 2014-20. As of June 2017, more than 250 participants had taken part in one of the 31 projects related with green economy, innovation, employment and transport.
Sources: https://interreg.eu/about-interreg; OECD (2018[12]).
Strengthening subnational capacities: Capabilities, data, monitoring, evaluation and other strategic tools
Regional governance reforms are an opportunity for developing strategic capacity, in particular on regional development planning and implementation. As networks of relationships become more intertwined – which is the case with increasing regional governance reforms – the ability to pinpoint and meet the demand for necessary skills and abilities, as well as the institutional capacity of administrative staff, becomes harder. The lack of sufficient technical or strategic capacities at the regional level is one of the most important challenges – and in some cases one of the most important barriers – to undertaking regional governance reforms. The lack of capacities has been raised by some stakeholders as one of the reasons for slowing down regional governance reforms. However, when undertaking regional governance reforms, a key component is capacity building: depending on the objectives of the reform, focusing on building strategic capacities (i.e. the ability to set strategic goals for social, political and economic outcomes) and ensuring the administrative and institutional capacity to realise those goals is a fundamental part of the reform itself. In addition, regional governance reforms are by themselves a capacity-building process in which all stakeholders can gradually learn how to manage greater responsibilities. Building the adequate strategic, administrative and institutional capacities takes time and needs a long-term commitment from central and subnational governments.
Reinforcing monitoring and evaluation processes at the regional level
As one of the key purposes of conducting regional governance reforms is the need to enhance regional competitiveness, strengthening policy monitoring and evaluation processes is fundamental. Monitoring and evaluation regional policies is important both at the regional and central government levels. While regional governments are gaining importance within general government policies and budgets, and are being allocated new responsibilities, they need to be able to monitor their performance to be accountable for the responsibilities that are assigned to them. Well-developed, outcome-oriented performance measurement systems also contribute to the success of regional development policies and investment by measuring and monitoring the effectiveness of policy and spending, be it by national or subnational level authorities (Mizell, 2008[13]). Monitoring regional policies is also important at the national level for assessing regions’ contribution to regional development potential, and measuring statistical and fiscal regional disparities. It can also enhance the accountability of regional governments towards citizens and private stakeholders.
Monitoring and evaluation mechanisms should be based on clear, robust and measurable indicators. These indicators should ideally be designed ahead of the policy-making and investment process, during the design and planning steps, following a consultative and participatory process that involves all regional stakeholders, including civil society and the private sector. They should be harmonised based on formal/standardised guidance documents produced by the central government. When developed collaboratively with regional actors for their design, implementation and use, and carefully coupled with specific incentive mechanisms and realistic targets, evaluation indicators can promote capacity development and good management practices, encourage performance improvements, and improve transparency and accountability at all levels of government (OECD, 2009[14]; Mizell, 2008[13]).
For appropriate monitoring and evaluation processes, it is crucial to develop adequate regional data and information. The development of and access to data at the regional scale represent a major challenge for countries. However, there are interesting initiatives that have brought positive results in this regard. Portugal, for example, has developed the Composite Index of Regional Development, published by Statistics Portugal on an annual basis since 2009 to serve as a tool for monitoring regional disparities. Colombia has recently made considerable efforts to create systematic guidance and online databases on regional statistics to facilitate reforms. A good example of this is the recently launched TerriData database, which comprises data on demographics, education, health, public services, public finances and security for the departments and the municipalities. The OECD Centre for Entrepreneurship, SMEs, Regions and Cities has also developed several regional databases that help regions and cities within the OECD to develop, implement and monitor their progress in terms of recovery from the COVID‑19 crisis, well-being or to achieve the Sustainable Development Goals (Box 5.5).
Box 5.5. The OECD’s work on developing regional indicators
For the three projects detailed below, the OECD classifies regions as the first administrative tier of subnational government (also labelled Territorial Level 2 or TL2). This classification is used by national statistical offices to collect information and in many countries represents the framework for implementing regional policies.
The Regional Recovery Platform
The OECD Regional Recovery Platform was prepared to better understand the spatial impact of the COVID-19 crisis and to support governments in the design and implementation of place-based interventions. Given the heterogeneous impact of the crisis, the recovery process will not be the same for all regions. Differentiated regional impacts call for territorialised policy responses, so there is a strong need for evidence to understand the impact of the crisis and to assess the progress of the recovery.
This OECD Regional Recovery Platform compiles both existing and new data prepared by the OECD to provide a more complete picture of the impact of the crisis on regions. New data have been collected to document the impact of the crisis, for example on vaccination rates and employment. The data are presented in an interactive format, using the PowerBI tool, and can be easily accessed and downloaded.
Measuring regional well-being
The OECD Regional Well-Being interactive website allows measuring well-being in one of the 395 OECD regions and comparing it with other regions. Users can also visualise regions from other countries with a similar combination of well-being outcomes.
Well-being is measured based on regional indicators that have been developed to cover 11 topics central to the quality of our lives: income, jobs, housing, health, access to services, environment, education, safety, civic engagement and governance, community, and life satisfaction. One or two indicators have been selected for each topic. For each topic, a score on a scale of 0-10 is attributed to the region, based on one or more indicators. This method has been developed to compare regions across countries. A higher score indicates better performance in a topic relative to all the other regions.
Territorial Approach to the Sustainable Development Goals
The OECD has developed a tool to measure progress towards the Sustainable Development Goals (SDGs) in more than 600 regions and 600 cities in OECD and partner countries. This initiative is part of an ambitious programme to support cities and regions to develop, implement and monitor strategies to achieve the SDGs.
The methodology consisted of identifying which SDG targets are the most relevant at the subnational scale. In the context of OECD countries, 105 out of the 169 SDG targets have been identified as very relevant for regions and cities. Then, the OECD gathered a set of 135 indicators that were identified as relevant for monitoring the SDG targets. These indicators were gathered from several existing databases, including: the OECD Regional and Metropolitan Databases, Eurostat, the Joint Research Centre and specific large international databases of microdata such as the Gallup World Poll. See OECD (2020[15]) for the complete methodology for measuring the distance to the SDGs.
In the framework of this initiative, a few pilot cities and regions have been selected to carry out a deeper analysis of the potential that the SDGs offer to reshape sustainable development policies from the ground up. Pilot regions include the province of Cordoba in Argentina, the region of Flanders in Belgium, the county of Viken in Norway, the state of Parana in Brazil and the Region of Southern Denmark in Denmark.
Monitoring and evaluation is useful to ensure an appropriate allocation of staff at the regional level. This depends to a large extent on the staff selection process, and the types of evaluations that are conducted to assess staff performance and contributions. It is recommended to ensure open, competitive hiring and merit-based promotion to meet these goals. Particular attention must be paid to developing skills in public investment and infrastructure project implementation, including knowledge of financing mechanisms and multi-year programming. These capacities are unevenly distributed among the territories. Regional bodies’ human resource departments must therefore monitor the hiring of new staff, make need assessments when appropriate and propose appropriate trainings (OECD, 2020[18]).
Digital tools can also support monitoring and evaluation in many ways. Information and communication technology (ICT) and most recent technological changes (blockchain, robotics) have multiplied the opportunities for subnational governments to improve the ways they communicate and involve citizens (e.g. e-democracy and ICT-based participation). Digital tools also help governments provide public services (e-government), manage public resources more efficiently (e.g. for collecting tax), improve staff capacity and management, and adopt new public management models. It can be particularly useful to realise territorial forecasting at a supra-municipal scale, allowing the different actors of a territory to identify the challenges and the different possible futures. Finally, digital tools can improve the relationships between the central and subnational governments, facilitating the shift towards more decentralised governance practices (OECD, 2020[18]).
Ensuring stakeholder engagement and participation
Tools for concertation and participation of private stakeholders and civil society also need to be developed at the regional level to ensure the success of place-based policies. Multi-level dialogue fora are a mechanism frequently used for co-ordinating regional development and investment priorities across stakeholders. These fora are platforms that bring together a combination of national and subnational public, private and third-sector actors in a regular, formalised manner (OECD, 2018[19]). Their objective is to facilitate the participation and consultation of the different stakeholders concerned by a given policy sector so as to reap the benefits from their ground knowledge and expertise and to overcome potential opposition to reform. Citizen and business engagement is important for improving the quality of projects and increasing accountability and trust in governments. Multi-stakeholder platforms are particularly relevant at the regional level, as regional governments are in charge of responsibilities closely related to the economic and social fabric of the territory, with a direct impact on economic and private stakeholders. For instance, public consultation is particularly important when implementing place-based investments, which are the result of a complex network of interactions between regional, central and local governments and public and private stakeholders.
The formats of multi-stakeholder platforms vary by country, sector and objective. They can be designed at the national or regional level, depending on the regional governance model. The types of stakeholders involved also varies based on the competences that are devolved to the regional level: in countries where regions are in charge of economic development and vocational training, it is important to involve representations from workers’ unions and chambers of commerce. Other members may include representatives from the academic sector, students’ unions or associations.
Regardless of the regional governance model, several countries have deployed multi-stakeholder platforms which appear successful. In Latvia, where regional development is mostly deconcentrated, there is a regional development co-ordination council that involves private sector stakeholders as well as representatives from the Employers’ Confederation of Latvia and the Latvian Chamber of Commerce and Industry. In the Netherlands, where regional governance is more decentralised, many urban regions have set up “economic boards”, which consist of a triple-helix co-operation between subnational governments, research institutes (including universities) and the private sector. Economic boards generally aim to spur a region’s development by stimulating innovation and connecting this to the regional job market, development of economically strong sectors in a region and its knowledge hubs (OECD, 2017[20]). In Poland, where different local cultures have to co-exist due to the fact that they previously belonged to different supranational powers (the German empire for its western part, the Russian empire for its central and eastern part, and the Austrian empire for its southern one), all local stakeholders were invited to take part in the debates preceding the regionalisation reforms, marking an important period of deep democratic debate. Sweden has established a national multi-level, multi-stakeholder forum to support its regional development agenda, and some Swedish regions, such as Örebro County, have created similar bodies as well (Box 5.6).
Box 5.6. Sweden Forum for Sustainable Growth and Regional Attractiveness
The Forum for Sustainable Growth and Regional Attractiveness facilitates and maintains a continuous dialogue among a wide and diverse array of stakeholders (e.g. central government, central government agencies, regional governments, municipalities, third-sector actors and the private sector). The forum is part of the implementation of Sweden’s National Strategy 2015-2020. It is considered an important tool for multi-level governance and to support national and regional level policy development through dialogue and co-operation. It is divided into two groups: one that promotes dialogue between national and regional level politicians, and one that fosters dialogue between national and regional level civil servants (director level).
There are also networks and working groups associated with the forum, such as an “Analysis Group”, that brings together 16 state agencies. The forum is led by the state secretary responsible for regional growth policy and participants are regional leaders and civil servants with regional development responsibilities in their portfolios; there are about 50 regular participants at the political level. Additional participants, such as ministers, state secretaries and directors within state agencies, can be invited on an ad hoc basis, depending on the topics on the agenda. The forum can serve as a “regional lens” or “prism” through which to consider diverse sector initiatives, e.g. in housing, innovation and transport.
Source: OECD (2020[2]).
References
[21] Charbit, C. and O. Romano (2019), “Contracts across levels of government to improve performance of public policies in complex context”, OECD, Paris.
[4] Charbit, C. and O. Romano (2017), “Governing together: An international review of contracts across levels of government for regional development”, OECD Regional Development Working Papers, No. 2017/04, OECD Publishing, Paris, https://doi.org/10.1787/ff7c8ac4-en.
[10] European Committee of the Regions (2020), EU Annual Regional and Local Eurobarometer, European Committee of the Regions, Brussels, https://cor.europa.eu/en/our-work/EURegionalBarometerDocs/4370-Barometer%20optimized.pdf.
[13] Mizell, L. (2008), “Promoting performance: Using indicators to enhance the effectiveness of sub-central spending”, OECD Working Papers on Fiscal Federalism, No. 5, OECD Publishing, Paris, https://doi.org/10.1787/5k97b11g190r-en.
[3] O’Brien, P. and A. Pike (2018), “‘Deal or no deal?’ Governing urban infrastructure funding and financing in the UK City Deals”, Urban Studies, Vol. 56/7, https://doi.org/10.1177/0042098018757394.
[17] OECD (2021), Regional Recovery Platform, https://www.oecd.org/regional/recovery-platform.htm.
[11] OECD (2021), “The territorial impact of COVID-19: Managing the crisis across levels of government”, Tackling Coronavirus (COVID-19): Contributing to a Global Effort, OECD, Paris, https://read.oecd-ilibrary.org/view/?ref=128_128287-5agkkojaaa&title=The-territorial-impact-of-covid-19-managing-the-crisis-across-levels-of-government.
[15] OECD (2020), A Territorial Approach to the Sustainable Development Goals: Synthesis Report, OECD Urban Policy Reviews, OECD Publishing, Paris, https://doi.org/10.1787/e86fa715-en.
[18] OECD (2020), Auditing Decentralised Policies in Brazil: Collaborative and Evidence-Based Approaches for Better Outcomes, OECD Public Governance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/30023307-en.
[2] OECD (2020), The Future of Regional Development and Public Investment in Wales, United Kingdom, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/e6f5201d-en.
[5] OECD (2019), OECD Regional Outlook 2019: Leveraging Megatrends for Cities and Rural Areas, OECD Publishing, Paris, https://doi.org/10.1787/9789264312838-en.
[16] OECD (2018), OECD Regional Well-Being: A User’s Guide, OECD, Paris, https://www.oecdregionalwellbeing.org/assets/downloads/Regional-Well-Being-User-Guide.pdf.
[12] OECD (2018), OECD Territorial Reviews: The Megaregion of Western Scandinavia, OECD Territorial Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264290679-en.
[1] OECD (2018), Rethinking Regional Development Policy-making, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264293014-en.
[19] OECD (2018), Rethinking Regional Development Policy-Making, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264293014-en.
[20] OECD (2017), Effective Public Investment across Levels of Government Toolkit: Poland, OECD, Paris, https://www.oecd.org/effective-public-investment-toolkit/Poland.pdf.
[8] OECD (2017), Making Decentralisation Work in Chile: Towards Stronger Municipalities, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264279049-en.
[7] OECD (2017), Multi-level Governance Reforms: Overview of OECD Country Experiences, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264272866-en.
[6] OECD (2017), Multi-level Governance Reforms: Overview of OECD Country Experiences, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264272866-en.
[14] OECD (2009), Governing Regional Development Policy: The Use of Performance Indicators, Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264056299-en.
[9] OECD-CoR (2020), “The impact of the COVID-19 crisis on regional and local governments: Main findings from the joint CoR-OECD survey”, OECD Regional Development Papers, No. 5, OECD Publishing, Paris, https://doi.org/10.1787/fb952497-en.