This document discusses the benefits of multi-level governance and provides examples from OECD countries. It finds that devolving spending to lower levels of government is common among OECD nations. Subnational governments play a key role in many policy areas. The document also examines reforms to improve coordination across different levels of government to maximize public investment. It proposes that the OECD provide guidance, tools, and support to strengthen capacities for decision-makers implementing macro-regional strategies like the EU Strategy for the Adriatic and Ionian Region.

1. Unlocking the potential of the Adriatic and
Ionian Region:
the added value of multi-level governance
Joaquim Oliveira Martins,
Head Regional Development Policy Division, OECD

2. Why does Multi-
level governance
generate added
value?

3. 3
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%
GDPpercapitaasashareofUSGDPpercapita(%,based
onGDPpercapitainUSDPPP)
SNG expenditure as a % of public expenditure

4. 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%
Expenditure Staff
expenditure
Public
procurement
Investment Tax revenue Debt
OECD average Minimum Maximum
% of general government - 2013

5. 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
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
GDP Total expenditure
Direct investment Social benefits
Staff expenditure Intermediate consumption

6. Policies

7. 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

8. 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

9. • 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
9

10. Fragmented metro governance hinders city
productivity
10

11. Fragmented metro governance increases
segregation of people
11
-.05
0
.05
.1
.15
0 .2 .4 .6 .8 1
Administrative fragmentation

12. 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)

13. OECD Tools

14. • 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
14

15. 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

16. 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?

17. 17
• 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

18. 18
Governance Indicators based on the OECD
Public Investment Recommendation

19. 19
Governance dimensions: a quantification

20. 20
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
Qualityofoverallinfrastructure
MLCI
Composite indicator (preliminary) on the
existence of multi-level coordination (MLCI)
The MLCI and the WEF Index on the quality of infrastructure

21. 21
 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

22. THANK YOU!
Joaquim.oliveira@oecd.org
www.oecd.org/effective-public-investment-toolkit