Subnational governments provide much of the basic infrastructure essential for economic development and well-being in regions and cities. They bear the responsibility for essential sectors, such as education, transport, housing, social services, and utility infrastructure. To provide high-quality, resilient, and inclusive infrastructure, subnational governments need access to adequate funding and financing for investment and maintenance purposes.
Public investment and infrastructure
Subnational governments - states, regions, and municipalities – play a key role in public investment, particularly in key infrastructure projects essential for economic development and well-being. Across the OECD, subnational governments account for nearly 60% of total public investment on average.
When well-managed, public investment is a catalyst for the growth and development of regions and cities. A place-based approach to investment with effective multi-level governance systems enables countries to maximise investment returns and support regional development.
Key messages
Subnational governments play a key role in the delivery, operatation and maintainanace of infrastructure, and their investments help drive the recovery from COVID-19. This report presents a framework to differentiate funding and financing instruments based on their types, along with outlining essential framework conditions necessary to support subnational governments. The report also offers illustrative examples from various countries.
Subnational governments play a key role in the delivery, operatation and maintenance of infrastructure, and their investments help drive the recovery from COVID-19. This report presents a framework to differentiate funding and financing instruments based on their types, along with outlining essential framework conditions necessary to support subnational governments. The report also offers illustrative examples from various countries.
With more than USD 1.57 trillion of federal funding committed over ten years, the Inflation Reduction Act and the Bipartisan Infrastructure Bill provides an opportunity to close the infrastructure investment gap in the United States. Maximising the long-term benefits from this funding – from job creation to improving the quality of life to addressing geographic divides – will require scaling up the capacity for inclusive investment at all levels of government. Many OECD countries have faced similar challenges and have developed new approaches that the United States can learn from.
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