The document discusses challenges and recommendations for regional and urban policy-making in the EU, emphasizing the declining public investment and the necessity for tailored approaches that take regional characteristics into account. It presents a roadmap for improving development programs, focusing on practical lessons like the importance of capacity-building, fostering relationships, ensuring ownership, and adapting policies to specific contexts. The OECD outlines strategies to enhance regional well-being and inclusiveness through effective governance and investment practices.

1. RETHINKING REGIONAL
DEVELOPMENT POLICY-MAKING
LAUNCH EVENT
19 March 2018, Brussels
Joaquim Oliveira Martins
Special Advisor, OECD/CFE

2. Challenges for regional
and urban policy in the
EU

3. Geography of
productivity
convergence
relative to
EU frontier
in European
regions,
2000-14

4. Geography of
productivity
convergence
relative to
national
frontiers in
European
regions,
2000-14

5. How to address the ‘geography of
discontent’?
Regional GDP exported to
the EU and Brexit votes in
the UK
Source: B. Los, P. McCann, J.
Springford and M. Thissen,
2017, “The Mismatch between
Local Voting and the Local
Economic Consequences of
Brexit”, Regional Studies, 51.5,
786-799

6. Public investment is still much subdued
in the EU
90
100
110
120
130
140
150
160
General government State government Local government
Subnational government GDP
-6.1% in 2016
-2.4% / year 2008-2016
-5.9% in 2016
-2.7% / year 2008-2016
-8.8% in 2016
-3.1% / year 2008-2016
-9.4% in 2016
-3.2% / year 2008-2016
+2.0% in 2016
Change in public investment in the EU28 from 2001-2016 (real terms)

7. The share of public investment in GDP has
fallen very significantly in many OECD
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
Percentage points difference in Public investment/GDP
between the average 2000-07 and 2015
Note: For Korea, the last available year is 2014.
Source: OECD (2017a), Economic Policy Reforms 2017: Going for Growth, OECD Publishing, Paris,
http://dx.doi.org/10.1787/growth-2017-en.

8. • Focus on linkages across the different
types of regions: metropolitan areas,
urban and rural regions
• Assessing drivers of regional
productivity catching-up related to
the proximity to cities and tradable
sectors
• Focus on the big picture: A framework
for measuring regional well-being and
inclusiveness
• Invest on the Multi-level Governance of
regional and urban policy
 OECD Recommendation on Effective
Public Investment across levels of
Government
How does the OECD Regional Development
Policy Committee address these challenges?

9. How to improve the
design and delivery of
development
programmes for regions
and cities?

10. Roadmap of the EC/OECD Governance
seminars on Rethinking Regional Development
Policy-making

11. Cross cutting lessons for practitioners
1. What works there might not work here
2. Capacities first
3. Keep it simple
4. It is the quality of the relationship that
counts
5. Ownership matters
6. Be aware of biases (e.g. risk aversion)
7. Get the incentives right
8. Keep trying and testing
9. Begin with the goal in mind

12. 1. What works there might
not work here
PITFALLS TO AVOID POTENTIAL SOLUTIONS
● Apply one-size-fits-all policy
instruments by overestimating the
need for accountability
● Design regional development
policies without considering
regional characteristics such as:
degree of decentralisation/
autonomy of subnational
governments, productivity level,
degree of corruption, capacity gaps,
etc.
● Under-estimate the role of market
and institutional conditions when
choosing financial instruments
● Ensure flexibility in policy design to
adapt to different contexts.
● Consider context to establish good
references when defining objectives
and showing comparable data.
● Explore asymmetric arrangements
and differentiated and targeted
pilot projects.
● Ensure a degree of flexibility to
programmes to specific local
circumstances and development
needs

13. 2. Capacities first
PITFALLS TO AVOID POTENTIAL SOLUTIONS
● Assume that bad performance is due
to a motivational problem; it is often
related to a capacity gap
● Ignore that capacities is more than
skills and abilities. Capacities are also
financial and institutional.
● Give sole responsibility for the design
and implementation of regional
development policies to SNGs with an
important capacity gap.
● Ignore that capacity-building is a
learning-by-doing process
● Spend more time in building capacities
and accompany regional development
policies with technical assistance
● Repeat interactions with subnational
governments (with the same rules) to
build capacities in practice (learning-
by-doing)
● Use a differentiated approach to build
capacities in order to respond to
different needs and different types of
regions

14. 3. Keep it simple
PITFALLS TO AVOID POTENTIAL SOLUTIONS
● Apply overly-detailed regulations
and procedures to address fiduciary
and accountability concerns
● Use excessively technical language
to communicate
● Change and adapt too frequently the
rules, instructions, and legislation for
the implementation of regional
policies by subnational governments
● Compare the administrative burden with
the expected benefits of regional policy
outcomes to avoid excessive amount of
guidance and legislation
● Use plain language and images to
communicate
● Keep instructions clear, succinct, and
convenient to improve participation from
interested parties
● Strengthen dialogue and trust to align
priorities
● Maintain stability of rules and regulations
over a long term to facilitate compliance
● Design simple performance frameworks by
reducing the number of indicators.
● Co-ordinate data reporting requirements,
guidelines, and submission frequencies
across sectors and programmes

15. 4. It is the quality of the
relationship that counts
PITFALLS TO AVOID POTENTIAL SOLUTIONS
● Undervalue dialogue and co-operation
tools
● Focus on formal arrangements without
taking care of their real effectiveness and
motivation of actors
● Ignore that developing strong, trusting,
and cooperative relationships is a
virtuous circle that starts with practice
● Underestimate the role of informal
dialogues and social networks that
favour cooperative relations
● Develop formal instances to dialogue and
build trust by taking care of:
─ Simplicity of the information and
feedback communicated
─ Transparency of rules and its
implications
─ Comprehensive stakeholder
engagement and bottom-up
approaches
● Use formal instruments (like contracts)
to build trust between parties
● Avoid unilateral decisions without
consultation
● Find the right balance between top-
down and bottom-up approaches

16. 5. Ownership matters
PITFALLS TO AVOID POTENTIAL SOLUTIONS
● Ignore that ownership is a process that
evolves over time
● Concentrate on government ownership
while underestimating citizens’
ownership and legislative buy-in
● Ensure repeated interactions to facilitate
building reputation and trust, i.e. two basic
elements required for actors to take
ownership of initiatives
● Design conditions as a mechanism to
encourage mutual accountability and
alignment of incentives rather than
focusing on financial leverage and input
controls.
● Use a citizen-centric ownership approach:
output-based conditionality with greater
citizen-based monitoring and evaluation,
and citizen oversight
● Agree on ex ante conditions through a
greater bottom-up approach – build
consensus on outputs and outcomes to be
reached by countries

17. 6. Be aware of biases
PITFALLS TO AVOID POTENTIAL SOLUTIONS
● Ignore the most common biases when
designing conditionalities, contracts,
performance frameworks, etc., like: risk
aversion
● Under-estimate the complexity of the
multi-organisational and multi-
stakeholder nature of regional
development policies
● Design mechanisms to reduce biases that
may explain communication problems,
engagement challenges, priority
misalignment, funding gaps or
misallocations.
● Start by defining the question(s) that can
guide the use of behavioural insights in
regional development policies
● Encourage “group decision-making” to
improve, for example, funding allocation
● Use behavioural insights to:
─ Improve communication and
facilitate engagement of
stakeholders.
─ Simplify procedures and regulations
─ Choose which data communicate and
how to do so
─ Inform the use of rewards or
incentives

18. 7. Get the incentives right
PITFALLS TO AVOID POTENTIAL SOLUTIONS
● Favour extrinsic motivations (external
sanctions and rewards) that may crowd
out intrinsic motivation
● Reward A when expecting B.
● Disassociate evaluations with rewards or
sanctions attached to compliance or no
compliance.
● Attach consequences to policy outcomes
instead of policy outputs
● Systematically take account of the
incentives created by rules and
organisational culture
● Use behavioural insights to design
incentives and performance schemes
● Encourage ownership of incentives linked
to sanctions and rewards (financial and
non-financial)
● Develop good feedback mechanisms and
build partnership and trust across
stakeholders.
● Set challenging and specific goals
together with the bodies responsible for
implementation
● Define clear relationship between inputs,
outputs, and outcomes.
● Build performance mechanisms on the
basis of outputs to attenuate the
influence of external factors.

19. 8. Keep trying and testing
PITFALLS TO AVOID POTENTIAL SOLUTIONS
● Be afraid of pilot experiences to test
policies in different contexts
● Extend indefinitely the “pilot” status
and accentuate differences and
inequalities across places.
● Focus only on certain types of pilots to
test policies
● Ensure flexibility in the
implementation of pilot experiences in
specific places/regions to allow
permanent adjustments through
learning-by-doing
● Develop a culture of trial-and-testing
to develop a practical body of
knowledge
● Test and evaluate policies through
different tools like systematic reviews,
quasi-experimental studies, non-
experimental evaluations, cohort
studies, surveys, etc.
● Find a balance between trying and
testing and continuity of norms.

20. 9. Begin with the goal in
mind
PITFALLS TO AVOID POTENTIAL SOLUTIONS
● Underinvest in evaluation and policy
monitoring to avoid costs
● Define policies without defining at the
start expected outputs and outcomes
and the evaluation techniques to be
used
● Concentrate too much on ex-post
evaluations ignoring of ex-ante
appraisals and monitoring
● Define policy goals collectively
● Define evaluation and monitoring
criteria in the early stages of the policy
design.
● Define and indicator system
accordingly to the expected results.
● Develop harmonised statistical
systems that allow for adequate
monitoring and evaluation.
● Focus on evaluation especially for pilot
projects.
● Use independent evaluation
institutions to enhance credibility,
trust, and enforcement
● Disseminate monitoring and
evaluation results, especially the ones
coming from independent institutions.

21. THANK YOU