Item iib-the-territorial-impact-of-covid-19-2020
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OECD Network on Fiscal Relations across Levels of Government, 16th Annual Meeting, 3-4 December 2020 – Virtual Meeting
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Item iib-the-territorial-impact-of-covid-19-2020
- 1. THE TERRITORIAL IMPACT OF COVID-19: MANAGING THE CRISIS ACROSS LEVELS OF GOVERNMENT Dorothee Allain-Dupré Head of Unit, Decentralisation, Subnational Finance and Public Investment CFE/OECD OECD Network on Fiscal Relations Across Levels of Government December 3, 2020
- 2. © OECD | Brussels Distrito Federal Castile La Mancha Ciudad de Mexico Metropolitana (Santiago) New Jersey Tameside Amazonas Lombardy Île-de-France Stockholm Limburg Quebec Área Metropolitana de Lisboa Ticino Karlovy Vary Mazowieckie Hovedstaden Bavaria Vienna Victoria Ishikawa Daegu West Coast Belgium Brazil Spain Mexico Chile United States United Kingdom Colombia Italy France Sweden Netherlands Canada Portugal Switzerland Czech Republic Poland Denmark Germany Austria Australia Japan Korea New Zealand 0 20 40 60 80 100 120 140 160 180 200 COVID-19 fatalities per 100,000 inhabitants lowest average highest Significant within-country differences in COVID-19 deaths • Significant disparities within countries • Large urban areas strongly hit, deprived areas the most affected • A number of factors explain this: ‒ Localisation of first clusters ‒ Density associated with the lack of appropriate measures ‒ Density associated with poor housing conditions ‒ Access to hospital beds Source : OECD 2020, The Territorial Impact of COVID-19: Managing the Crisis across Levels of Government Within-country differences in COVID-19 related fatalities In deaths per 100 000 population, November 2020 The Territorial impact of COVID-19: managing the crisis across levels of government
- 3. © OECD | 3 Significant within-country differences in excess mortality % increase in deaths relative to the 2018-19 average, small regions (TL3) if available, otherwise large regions (TL2) Source: OECD (2020), OECD Regions and Cities at a Glance 2020 Excess mortality, February to June 2020
- 4. © OECD | 4 A strong and asymmetric fiscal impact on SNGs The Territorial impact of COVID-19: managing the crisis across levels of government Overall impact on SNGs finances As a percentage of total, by transaction, June 2020 Source : OECD-CoR 2020, The impact of the COVID-19 crisis on regional and local governments 61% 45% 31% 16% 29% 41% 29% 28% 6% 11% 16% 17% 1% 2% 13% 17% 2% 2% 11% 21% 0% 20% 40% 60% 80% 100% Revenue Expenditure Debt management Access to borrowing High Moderate Low Zero N.A. Asymmetric impact “High impact” as a percentage of total, by transaction and municipal population, June 2020 0% 50% 100% Access to borrowing Debt management Expenditure Revenue Under 10 000 10 000 to 50 000 50 000 to 250 000 Over 250 000 Municipal population
- 5. © OECD | 5 Governments have reacted quickly • Territorial approaches to the management of the health crisis • Large economic recovery packages – firms, vulnerable populations, public investment • (i) strengthening health systems; • (ii) digitalisation; • (iii) accelerating the transition to a carbon neutral economy • Measures to support subnational finance in 2/3 of OECD countries The Territorial impact of COVID-19: managing the crisis across levels of government Supporting subnational government finance : 4 categories of measures
- 6. © OECD | • An explicit territorial dimension • Investment strategies should involve subnational governments early on • Investment must not be an adjustment variable: it is necessary to mobilise all potential internal and external financing sources to cover investment needs • Ensuring quality investment, based on green/climate and social investment priorities • Improving the governance of public investment, • Avoiding fragmented projects 6 Implementing public investment recovery strategies OECD Recommendation on Effective Public Investment across Levels of Government
- 7. © OECD | Share of jobs which can potentially be performed remotely As a percentage of total jobs, 2018 7 Looking ahead: implications for regional, urban, rural development Source: https://oe.cd/il/3h Van Western Slovakia Vest Islas Baleares Kozep-Dunantul Northwest Mississippi Basilicata Jadranska Hrvatska Alentejo Burgenland Chemnitz Sterea Ellada Northern and Western Lietuvos regionas West-Vlaanderen Hedmark og Oppland Pohjois-Suomi Basse-Normandie Nordjylland Ostschweiz Norra Mellansverige North East Istanbul Bratislava Bucuresti-Ilfov Comunidad de Madrid Budapest Prague District of Columbia Lazio Kontinentalna Hrvatska Lisboa Wien Hamburg Attica Eastern and Midland Sostines regionas Brabant Wallon Osloog Akershus Helsinki-Uusimaa Ile de France Hovedstaden Zurich Stockholm London 10% 20% 30% 40% 50% 60% 70% TUR SVK ROU ESP HUN CZE USA ITA HRV OECD25 PRT LVA AUT DEU GRC IRL EST LTU BEL NOR FIN FRA DNK ISL NLD CHE SWE GBR LUX Minimum National Average Maximum The Territorial impact of COVID-19: managing the crisis across levels of government • The ‘new normal’ may imply a significant increase in remote working. This is a potential game-changer for spatial equilibrium between urban and rural areas. • The shift in spatial equilibrium will also depend on the digital transition • Urban populations have a significantly higher potential to telework than those in rural areas
- 8. © OECD | 8 3% 12% 15% 16% 17% 19% 37% 37% 33% 33% 20% 33% 31% 32% 28% 32% 15% 11% 10% 11% 26% 3% 6% 8% 11% 0% 20% 40% 60% 80% 100% Cross-border cooperation between subnational entities Vertical coordination mechanisms between the central/federal and subnational governments Vertical coordination mechanisms between the different levels of subnational government (regional and local governments) Horizontal cooperation between regions, between intermediate levels or between municipalities Cooperation between subnational entities and other stakeholders (businesses, social partners, NGOs, etc.) Very effective Effective Somewhat effective Ineffective (or non-existent) Don't know or no answer Only around one-half of respondents in the EU state that vertical and horizontal coordination was effective or very effective Importance of clarify in assignment and coordination (vertical, horizontal, cross-border)
- 9. © OECD | 9 Mobilisation of coordination mechanisms essential for crisis management and successful exit strategies Source : OECD-CoR 2020, The impact of the COVID-19 crisis on regional and local governments 42% 55% 57% 72% 73% 79% 90% 42% 32% 34% 23% 23% 16% 7% 13% 6% 3% 1% 0% 1% 1% 4% 7% 6% 4% 3% 4% 3% 0% 20% 40% 60% 80% 100% Additional human resources for subnational governments Availability of digital tools to trace the cases Involvement of the private sector and civil society Possibility to adapt exit measures to the local situation Subnational government communication with the public Additional financial resources for subnational governments Coordination in the design and implementation of measures among all… Very important Somewhat important Not important Don't know or no answer Policy tools at the core of a successful exit strategy
- 10. © OECD | Looking ahead: Implications for multi-level governance to build more resilient regions 10 The Territorial impact of COVID-19: managing the crisis across levels of government • Clear assignment of responsibilities among levels of government • Ensuring properly funded mandates • Effective coordination mechanisms – vertical horizontal, cross-border • Partnerships with private actors • More flexibility in the institutional arrangements, use of partnerships across levels of government • Rethinking regional policy instruments and governance, and sources of financing • Greater differentiation in the way responsibilities are assigned – to allow a more granular assignment of responsibilities, which corresponds to the level of capacities of SNGs
- 11. Thank you For more information www.oecd.org/coronavirus Dorothee.Allain-dupre@oecd.org Link to the paper: oe.cd/il/2X6