Presentation on Governance and Economic Performance made at the Lagging Regions Seminar held in Brussels, Belgium on 22-23 June 2015. Presentation by Joaquim Oilveira Martins, Head of OECD Regional Development Policy Division. www.oecd.org/regional/regional-policy/

1. GOVERNANCE AND ECONOMIC
PERFORMANCE
Joaquim Oliveira Martins, Head, Regional Development Policy
Division OECD
Lagging Regions Seminar , Brussels 23 June 2015

2. • Invest using an integrated strategy tailored to different places
• Adopt effective co-ordination instruments across levels of govt
• 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
The OECD Recommendation on the
Governance of Public Investment

3. 3
Quality of Public Investment: implementation of the
OECD Recommendation
Initial indicators developed as a
follow-up of the Recommendation
 Over 70 indicators
 20 for Pillar I, 24 for Pillar II and 27
for Pillar III
 Comprehensive multi-disciplinary
approach (multi-level governance,
public finances, regional policy,
public management)
 Mix between factual indicators and
qualitative indicators based on
judgement

4. 4
Examples of good practices and recent
developments disseminated through the web Toolkit

5. 5
A pilot study for Eastern Slovakia
Indicators on MLG of public investment, Eastern Slovakia
OECD (2015)
 Easy to identify key challenges: Principles 1, 2, 3 and 6
(place-based approaches, coordination across sectors, levels of government,
jurisdictions; engagement of private actors)
1-Investment strategy tailored to places
2-Vertical coordination
3-Horizontal coordination
4-Ex-ante appraisals
5-Stackeholders' engagement
6-Private sectors' involvement
7-Management capacities of SNGs
8-Performance monitoring and evaluation
9-Clear intergovernmental fiscal framework
10-Transparent financial management at all levels
11-Strategic use of procurement
12-Regulatory coordination across levels

6. • Fragmentation of a metropolitan area into many municipalities
reduces per capita GDP and productivity
– A doubling of the number of municipalities per 100,000 inhabitants
reduces productivity by 6%
Governance premium: the link between
metro governance and performance

7. • Negative impact of municipal
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
• Metropolitan governance bodies are
common throughout the OECD, but
only 18% have regulatory powers
Improving the governance of functional
metro areas

8. • Governance bodies also lead to better outcomes in several other
dimensions
Other gains from governing functional
metro areas at the relevant scale
Sprawl Satisfaction with Public
Transport

9. Governments need to change
Ministry
Agency
Deconcentrated
regional body
Ministry
Agency
Deconcentrated
regional body
Ministry
Agency
Deconcentrated
regional body
Ministry
Agency
Deconcentrated
regional body
Traditional governance structures
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10. The reform of Governance systems
• Governments are increasingly aware that many of the challenges they are facing
cannot be solved alone or by a single ministry. A more joined up approach can help
build synergies and increase effectiveness. This is happening in several OECD
governments (e.g., Australia, Canada, to some extent UK, NL, US), which are
realizing that the traditional (static) approach is not sufficiently agile to meet
complexity.
• They are building a framework by which many individual pieces can play their role
in meeting policy objectives (need to know what role is and the policy objective)
while also having the flexibility to take approaches appropriate to their sector
realities. For example, the approach of a Ministry responsible for rural matters may
be different than a Ministry for Housing and Urbanism, though they should both
work collaboratively to meet environmental policy objectives.
• The important piece is to be identifying and implementing mechanisms that begin to
build a culture of trust, cooperation, collaboration and integrity
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